CUYAHOGA COUNTY SINGLE AUDIT FOR THE YEAR ENDED DECEMBER 31, 2011

Transcription

CUYAHOGA COUNTY
SINGLE AUDIT
FOR THE YEAR ENDED DECEMBER 31, 2011
Cuyahoga County, Ohio
Table of Contents
Page
Independent Accountants’ Report........................................................................................................................... 1
Management’s Discussion and Analysis................................................................................................................. 3
Government-wide Financial Statements
Statement of Net Assets ................................................................................................................................. 13
Statement of Activities .................................................................................................................................... 14
Fund Financial Statements
Balance Sheet – Governmental Funds .......................................................................................................... 16
Reconciliation of Total Governmental Fund Balances to Net Assets of Governmental Activities .................. 18
Statement of Revenues, Expenditures and Changes In Fund Balances – Governmental Funds ................. 19
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of Governmental Funds to the Statement of Activities .......................................................... 21
Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual
(Budget Basis):
General ........................................................................................................................................................... 22
Human Services ............................................................................................................................................. 23
Health and Human Services Levy .................................................................................................................. 24
County Board of Developmental Disabilities .................................................................................................. 25
Alcohol, Drug and Mental Health Board ......................................................................................................... 26
Statement of Fund Net Assets – Proprietary Funds ............................................................................................. 27
Statement of Revenues, Expenses and Changes in Fund Net Assets – Proprietary Funds ................................ 28
Statement of Cash Flows – Proprietary Funds ..................................................................................................... 29
Statement of Fiduciary Assets and Liabilities – Agency Funds ............................................................................ 31
Notes to the Basic Financial Statements .............................................................................................................. 33
Federal Awards Expenditures Schedule ............................................................................................................ 101
Notes to the Federal Awards Expenditures Schedule ........................................................................................ 109
Independent Accountants’ Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Required by Government Auditing Standards .................................................. 111
Independent Accountants’ Report on Compliance with Requirements
Applicable To Each Major Federal Program and on Internal Control Over
Compliance In Accordance With OMB Circular A-133 ....................................................................................... 113
Schedule of Findings and Questioned Costs ..................................................................................................... 115
Schedule of Prior Audit Findings and Questioned Costs .................................................................................... 125
This Page Intentionally Left Blank
INDEPENDENT ACCOUNTANTS’ REPORT
Cuyahoga County
1219 Ontario Street
Cleveland, Ohio 44113-1657
To the Members of Council:
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of Cuyahoga County (the
County) Ohio, as of and for the year ended December 31, 2011 which collectively comprise the County’s
basic financial statements as listed in the table of contents. These financial statements are the
responsibility of the County’s management. Our responsibility is to express opinions on these financial
statements based on our audit. We did not audit the financial statements of the discretely presented
component unit, The MetroHealth System. Those financial statements were audited by other auditors
whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts
included for the discretely presented component unit, is based solely on the report of the other auditors
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in the Comptroller General of the
United States’ Government Auditing Standards. Those standards require that we plan and perform the
audit to reasonably assure whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe our
audit and the report of other auditors provide a reasonable basis for our opinions.
In our opinion, based on our audit and the report of the other auditors, the financial statements referred to
above present fairly, in all material respects, the respective financial position of the governmental
activities, the business-type activities, the discretely presented component unit, each major fund, and the
aggregate remaining fund information of Cuyahoga County, Ohio, as of December 31, 2011, and the
respective changes in financial position and where applicable, cash flows, thereof and the respective
budgetary comparisons for the General Fund, Human Services Fund, Health and Human Services Levy
Fund, County Board of Developmental Disabilities Fund and Alcohol, Drug and Mental Health Board Fund
for the year then ended in conformity with accounting principles generally accepted in the United States of
America.
As described in Note 3, the County implemented Governmental Accounting Standards Board Statement
No. 54, “Fund Balance Reporting and Governmental Fund Type Definitions” and restated the December
31, 2010 fund balances of the Governmental and Proprietary Funds due to a change in fund structure.
Lausche Building / 615 Superior Ave., NW / Twelfth Floor / Cleveland, OH 44113‐1801 Telephone: (216) 787‐3665 (800) 626‐2297 Fax: (216) 787‐3361 www.auditor.state.oh.us 1
Cuyahoga County
Independent’s Accountants Report
Page 2
In accordance with Government Auditing Standards, we have also issued our report dated July 12, 2013,
on our consideration of the County’s internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts and grant agreements and other
matters. While we did not opine on the internal control over financial reporting or on compliance, that
report describes the scope of our testing of internal control over financial reporting and compliance and
the results of that testing. That report is an integral part of an audit performed in accordance with
Government Auditing Standards. You should read it in conjunction with this report in assessing the
results of our audit
Accounting principles generally accepted in the United States of America require this presentation to
include Management’s discussion and analysis, as listed in the table of contents, to supplement the basic
financial statements. Although this information is not part of the basic financial statements, the
Governmental Accounting Standards Board considers it essential for placing the basic financial
statements in an appropriate operational, economic, or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards generally
accepted in the United States of America, which consisted of inquiries of management about the methods
of preparing the information and comparing the information for consistency with management’s responses
to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the
basic financial statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an opinion or
provide any other assurance.
We conducted our audit to opine on the financial statements that collectively comprise the County’s basic
financial statements taken as a whole. The schedule of federal awards expenditures provides additional
information required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements.
The schedule of federal awards expenditures is management’s responsibility, and was derived from and
relates directly to the underlying accounting and other records used to prepare the basic financial
statements. This schedule was subject to the auditing procedures we applied to the basic financial
statements. We also applied certain additional procedures, including comparing and reconciling this
information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, in accordance with auditing standards
generally accepted in the United States of America. In our opinion, this information is fairly stated in all
material respects in relation to the basic financial statements taken as a whole.
Dave Yost
Auditor of State
Columbus, Ohio
July 12, 2013
2
Management’s Discussion and Analysis
For the Year Ended December 31, 2011
(Unaudited)
As management of Cuyahoga County, we offer the readers of Cuyahoga County’s financial statements the
following discussion and analysis of the financial performance as well as an overall review of the County’s
financial activities for the fiscal year ended December 31, 2011. The intent of this discussion and analysis is
to look at the County’s financial performance as a whole. Readers should also review the financial
statements and notes to those respective statements to enhance their understanding of the County’s financial
performance.
Financial Highlights
Key Financial Highlights for 2011 are as follows:
o
Cuyahoga County Council is an 11-member body elected by residents of each council
district. This form of government for Cuyahoga County was established in January 2010,
replacing the three-member Board of County Commissioners, when the Charter form of
government adopted by voters went into effect. The Council makes policy decisions for the
effective functioning of County government, and is a link between government agencies and
citizens. It has legislative and taxing authority for the County, and is a co-equal branch of the
County government with the executive branch.
o
For 2011, the County implemented Governmental Accounting Standard Board (GASB)
Statement No. 54, “Fund Balance Reporting and Governmental Fund Type Definitions”
which recognizes constraints imposed upon the use of the resources in governmental funds
and categorizes the constraints into five classifications.
o
Construction was started on the County’s new convention facility. The facility, known as
the Global Center for Health Innovation (GCHI–formerly known as the Medical Mart), is
designed to bring buyers and sellers together. GCHI is the world’s only facility targeted
specifically to the medical and health care industries.
o
Overall, expenses increased slightly as management continues to diligently plan expenses
staying carefully within the County’s revenues. The County actively seeks grants in order to
maintain and improve the services the County residents expect while still controlling the
costs of those services.
Using this Financial Report
This annual report consists of a series of financial statements and notes to those statements. These
statements are organized so the readers can understand Cuyahoga County as a financial whole, an entire
operating entity. The statements then proceed to provide an increasingly detailed look at specific financial
activities.
The Statement of Net Assets and Statement of Activities provide information about the activities of the
whole County, presenting both an aggregate view of the County’s financial condition and a longer-term view
of those finances. Fund financial statements provide the next level of detail. For governmental funds, these
statements tell how services were financed in the short-term as well as what remains for future spending.
The fund financial statements also look at the County’s most significant funds with all other non-major funds
presented in total in one column.
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(Unaudited)
Reporting on the County as a Whole
Statement of Net Assets and the Statement of Activities
While these documents include the various funds used by the County to provide programs and activities, the
view of the County as a whole looks at all financial transactions and asks the question, “How did we do
financially during 2011?” The Statement of Net Assets and the Statement of Activities answers this
question. These statements include all non-fiduciary assets and liabilities using the accrual basis of
accounting similar to the accounting used by most private-sector companies. This basis of accounting takes
into account all of the current year’s revenues and expenses regardless of when cash is received or paid.
These two statements report the County’s net assets and changes in those assets. This change in net assets is
important because it tells the reader that, for the County as a whole, the financial position of the County has
improved or diminished. The causes of this change may be the result of many factors, some financial, some
not. Non-financial factors include the change in value in the County's tax base, current property tax laws in
Ohio restricting revenue growth, and other factors.
In the Statement of Net Assets and the Statement of Activities, the County is divided into three distinct kinds
of activities:
Governmental Activities – Most of the County’s programs and services are reported here including health
and safety services, social services, justice, community development, public works and general government.
These services are funded primarily by taxes and intergovernmental revenues including federal and state
grants and other shared revenues.
Business-Type Activities – These services are provided on a charge for goods or services basis intended to
recover all of the expenses or costs of the goods or services provided.
Component Unit – The County includes financial data of the MetroHealth System (the “System”). The
System is a legally separate, non-profit organization, which provides health care and hospitalization to the
general public and care for the County’s indigents. Under Ohio Revised Code 339.06, the County appoints
the majority of the Hospital’s Board of Trustees who has certain powers and duties. The component unit is
separate and may buy, sell, lease and mortgage property in their own name and can sue or be sued in their
own name.
Reporting the County’s Most Significant Funds
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities. The County uses fund accounting to ensure and demonstrate compliance
with finance-related legal requirements and designates funds into the following three categories:
governmental funds, proprietary funds and fiduciary funds.
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(Unaudited)
Fund financial statements provide a summary of the County’s financial position and activity and focus on
short-term flow of financial resources. The statements focus on the following significant governmental
funds: the general fund, human services, health and human services levy fund, County Board of
Developmental Disabilities and Alcohol, Drug and Mental Health Board special revenue funds and the
capital projects and Global Center for Health Innovation (GCHI) capital projects funds.
Governmental Funds Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government-wide financial statements. However, unlike the government-wide
financial statements, governmental fund financial statements focus on near-term inflows and outflows of
expendable resources, as well as on balances of expendable resources available at the end of the fiscal year.
Such information may be useful in evaluating a government’s near-term financing requirements.
Because the focus of the governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar information
presented for governmental activities in the government-wide financial statements. By doing so, readers may
better understand the long-term impact of the government’s near-term financing decisions. Both the
governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and
changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds
and governmental activities.
The County maintains a multitude of individual governmental funds. Information is presented separately in
the governmental fund balance sheet and in the governmental statement of revenues, expenditures, and
changes in fund balances for the major funds, which were identified earlier. Data from the other
governmental funds are combined into a single, aggregated presentation.
Proprietary Funds The County maintains two different types of proprietary funds. Enterprise funds are used
to report the same functions presented as business-type activities in the government-wide financial
statements. The County uses several enterprise funds to account for various operations. The County’s major
enterprise fund is the sanitary engineer fund. Internal service funds are an accounting device used to
accumulate and allocate costs internally among the County’s various functions.
Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the
County. Fiduciary funds are not reflected in the government-wide financial statements because the resources
of those funds are not available to support the County’s own programs. The accounting used for fiduciary
funds is much like that used for proprietary funds. The County’s fiduciary funds are agency.
Notes to the Financial Statements The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements.
-5-
(Unaudited)
The County as a Whole
You may recall that the Statement of Net Assets provides the perspective of the County as a whole. Table 1
provides a summary of the County’s net assets for 2011 compared to 2010:
(Table 1)
Net Assets
(in thousands)
Governmental Activites
Assets
Current and Other Assets
Capital Assets, Net
Total Assets
Liabilities
Current Liabilities
Long-term Liabilities
Due within one Year
Due in More than one Year
Total Liabilities
Net Assets
Invested in Capital Assets,
Net of Related Debt
Restricted
Unrestricted
Total Net Assets
2011
2010
$1,509,187
918,162
Business-Type Activites
2011
2010
$1,487,328
749,751
$59,647
56,263
2,427,349
2,237,079
456,130
Total
2011
2010
$51,509
58,761
$1,568,834
974,425
$1,538,837
808,512
115,910
110,270
2,543,259
2,347,349
475,172
1,672
1,189
457,802
476,361
80,946
866,276
71,057
831,601
903
17,046
1,307
13,112
81,849
883,322
72,364
844,713
1,403,352
1,377,830
19,621
15,608
1,422,973
1,393,438
490,052
455,613
78,332
331,271
366,028
161,950
39,027
0
57,262
34,298
0
60,364
529,079
455,613
135,594
365,569
366,028
222,314
$1,023,997
859,249
$96,289
$94,662
$1,120,286
$953,911
As one can see from the increase in overall net assets, the County was able to provide critical services to
County residents while diligently streamlining services and facilities to maximize efficiency for taxpayers.
The major increase in capital assets is directly related to the County’s commitment to undertake major capital
projects so that residents can continue to receive high-quality services while positioning the County for
future economic growth and prosperity.
In order to further understand what makes up the changes in net assets for the current year, the following
table gives readers further details regarding the results of activities for 2011 and 2010.
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(Unaudited)
(Table 2)
Changes in Net Assets
(In Thousands)
Governmental Activities
Business-Type
Total
2011
2010
2011
2010
2011
2010
Program Revenues
Charges for Services and Sales
Operating Grants, Contributions
and Interest
Capital Grants and Contributions
$95,679
$89,804
$29,031
$24,589
$124,710
$114,393
574,608
59,350
523,303
36,712
0
144
0
0
574,608
59,494
523,303
36,712
Total Program Revenues
729,637
649,819
29,175
24,589
758,812
674,408
General Revenues
Property Taxes
Sales Taxes
Bed Taxes
Payments in Lieu of Taxes
Grants and Entitlements
Interest
Other
337,440
242,077
12,391
4,988
65,990
12,812
27,405
346,331
206,418
31,370
0
116,900
8,234
27,619
0
0
0
0
0
15
235
0
0
0
0
0
0
53
337,440
242,077
12,391
4,988
65,990
12,827
27,640
346,331
206,418
31,370
0
116,900
8,234
27,672
Total General Revenues
703,103
736,872
250
53
703,353
736,925
1,432,740
1,386,691
29,425
24,642
1,462,165
1,411,333
91,463
323,452
31,655
230,989
482,462
48,418
59,301
0
0
0
0
80,598
322,180
40,461
217,531
512,291
49,604
23,686
0
0
0
0
0
0
0
0
0
0
0
20,950
1,759
3,592
1,749
0
0
0
0
0
0
0
17,056
2,026
3,697
1,916
91,463
323,452
31,655
230,989
482,462
48,418
59,301
20,950
1,759
3,592
1,749
80,598
322,180
40,461
217,531
512,291
49,604
23,686
17,056
2,026
3,697
1,916
1,267,740
1,246,351
28,050
24,695
1,295,790
1,271,046
165,000
140,340
1,375
Total Revenues
Program Expenses
General Government:
Legislative and Executive
Judicial
Public Works
Health and Safety Services
Social Services
Community Development
Interest and Fiscal Charges
Sanitary Engineer
Airport
Parking Garage
Information Systems
Total Program Expenses
Increase (Decrease) in Net
Assets before Transfers
Transfers
(252)
(451)
166,375
140,287
252
451
(53)
0
0
Change in Net Assets
164,748
139,889
1,627
398
166,375
140,287
Net Assets Beginning of Year - Restated
859,249
719,360
94,662
94,264
953,911
813,624
$1,023,997
$859,249
$96,289
$94,662
$1,120,286
$953,911
Net Assets End of Year
-7-
(Unaudited)
The County actively pursues grants and controls expenses while still maintaining the high standards the
residents expect of the County. Management continues to diligently plan expenses, staying carefully within
the County’s revenues.
Financial Analysis of the Government’s Funds
As noted earlier, the County uses fund accounting to demonstrate fiscal accountability and assume financial
resources were raised and expended in compliance with budgetary and other legal provisions.
Governmental Funds The focus of the County’s governmental funds is to provide information on near-term
inflows, outflows and balances of expendable resources. Such information is useful in assessing the
County’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of
the County’s net resources available for spending at the end of the year.
As of the end of the current year, the County’s governmental funds reported combined ending fund balances
of $937,109,414. $128,464,126 of this total amount constitutes unassigned fund balance, which is available
for appropriation at the government’s discretion within certain legal constraints and purpose restrictions. The
remainder of the fund balance is non-spendable, restricted, committed or assigned to indicate that it is not
available for new spending.
The general fund revenues exceeded expenditures primarily due to reductions in operating expenditures from
staff reductions.
Other Governmental Funds had an increase in fund balance as the County continues to obtain grant funds to
provide residents with dynamic services in an ever changing world.
Proprietary Funds Proprietary fund reporting focuses on the determination of operating income, changes in
net assets, financial position and cash flows. The increase in the Sanitary Engineer Fund can be attributed to
the increase in charges for services collections out pacing decreases in expenditures, as well as adding
districts to the County system.
General Fund Budgeting Highlights
Provisions for budgeting are prescribed by Ohio Revised Code 5705. Essentially, the budget is the County’s
appropriations which are restricted by the amounts of anticipated revenues certified by the Budget
Commission in accordance with the Revised Code. During 2011, the County amended its general fund
budget as necessary to allow for increases and decreases in contractual agreements, reductions in staff,
changes in the anticipated uses of approved funding, etc. Actual revenues received were $18,740,517 higher
than certification primarily due to continues growth in revenue from sales taxes, charges for services and
other revenue. Actual expenditures were $25,119,995 less than appropriations due mainly to staff reductions
and the diligence of management to control expenses.
-8-
(Unaudited)
2012 – 2013 Revenue Assumptions
The revenues that support County operations are expected to remain flat overall in 2012 with some growth
expected in a few key sources such as sales tax. This outlook is based on a realistic assessment of local
economic conditions and analysis of current revenue trends.
County sales tax has remained strong and exhibited growth in 2011; some underlying indicators have been
less certain. The unemployment rate in the County was 8.6 percent in the fall of 2011 compared to an
average rate of 9.5 percent a year ago. The drop in unemployment is a positive sign, but the current rate is
still higher than the State rate and unemployment claims filed in the County are still above pre-recessionary
levels.
The recovery in the housing market in the County has been slow, average sale prices have not increased since
this time period from the prior year and current delinquency rates on property taxes are still running over 8
percent in 2011 with total delinquencies over 16 percent. The rate of price increases has remained low while
the median consumer price index has been below 2 percent.
The funds available to finance operations are limited to the revenues the County collects each year. The
projected trend of revenue streams is a substantial driver of how the budget process determines what
resources are available in the next budget cycle.
The revenue estimates will provide the financial foundation for County operations. There are several
perspectives that were considered as part of that process:

What is the new normal for growth? Annual growth rates of 3 percent were considered standard in
previous years. The new expectation for growth in sales tax and charges is assumed to be only
slightly ahead of inflation in the next three years.

How does inflation limit real revenue growth? Inflation is currently tracking at around 1.8 percent
(using median CPI measure) and is below the level associated with strong economic growth.
Sustained low levels of inflation will translate into flat tax collections and degrade the real level of
growth over time.

The trend is more important than the number. Identifying estimates for key revenue sources is an
important part of developing the 2012-2013 budget. The trends associated with these sources are
also a very critical part of plotting out the next three years of the County operating plan.

Where are the best prospects for revenue growth? Improvements to the local economy and job
creation will have a pronounced effect on sales tax collections. The next two years will be a pivotal
time in the County. The undertaking of large local projects could amplify economically sensitive
revenue streams.
The County Fiscal Office will be conducting the State mandated sexennial reappraisal of all real property in
the County. It is anticipated that total overall real property values will go down after the reappraisal.
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(Unaudited)
Capital Assets and Debt Administration
Capital Assets
Table 3 shows 2011 values compared to 2010.
(Table 3)
Capital Assets at December 31
(Net of Accumulated Depreciation)
(in thousands)
Governmental
Activities
Land
Construction in Progress
Land Improvements
Utility Plant
Buildings, Structures
and Improvements
Furniture, Fixtures and Equipment
Vehicles
Infrastructure
Total Capital Assets
Business-Type
Activities
Total
2011
2010
2011
2010
$93,222
403,292
6,964
0
$93,222
253,496
7,517
0
$12,266
120
1,623
31,012
$12,266
6,735
1,328
26,047
$105,488
403,412
8,587
31,012
2011
$105,488
260,231
8,845
26,047
2010
264,370
16,536
3,159
130,619
271,213
19,973
2,848
101,482
9,272
414
1,556
0
10,010
481
2,070
0
273,642
16,950
4,715
130,619
281,223
20,454
4,918
101,482
$918,162
$749,751
$56,263
$58,937
$974,425
$808,688
The governmental activities increases of $168.4 million were the result primarily of the continued
construction on the new Juvenile Justice Center amounting to $13.2 million, and the Global Center for
Health Innovation building construction amounting to $131.1 million.
The business-type activities decreased by $2.7 million as depreciation outpaced capital asset additions.
Additional information on Cuyahoga County’s capital assets can be found in Note 11 of this report.
- 10 -
(Unaudited)
Debt
Table 4 below summarizes the County’s long-term obligations outstanding.
(Table 4)
Outstanding Long-term Obligations at Year End
(in thousands)
Governmental
Activities
Business Type
Activities
2011
2010
2011
General Obligation Bonds
Self-Supported Bonds
Revenue Bonds
ODOD Loans
OPWC Loans
ODOT Loans
OWDA Loans
Bond Anticipation Notes
Capital Leases
Compensated Absences
Special Termination Benefits
$308,739
0
464,267
2,500
938
4,962
0
9,300
120,082
26,830
9,604
$330,207
0
475,636
3,000
1,001
5,808
0
10,150
20,851
27,917
28,090
$0
4,195
0
0
581
0
12,467
0
0
651
56
Total
$947,222
$902,660
$17,950
2010
Total
2011
2010
$0
4,610
0
0
686
0
8,186
0
0
761
175
$308,739
4,195
464,267
2,500
1,519
4,962
12,467
9,300
120,082
27,481
9,660
$330,207
4,610
475,636
3,000
1,687
5,808
8,186
10,150
20,851
28,678
28,265
$14,418
$965,172
$917,078
Cuyahoga County received a “AA+” rating from Standard & Poor’s, “AA+” from Fitch Ratings and an
“Aa1” rating from Moody’s Investors Service for its general obligation (LTGO) debt. Moody’s and
Standard & Poor's have rated the revenue bonds “Aa2 and "AA", respectively. Fitch Ratings, Moody’s and
Standard & Poor’s completed a review of the County’s bond ratings in 2011 (Fitch) 2012 (Moody's and
Standards & Poor's) and the ratings were affirmed with a stable outlook.
The County’s overall legal debt margin was $513.9 million at December 31, 2011. This is the additional
amount of debt the County could issue. The County continues to monitor its outstanding debt. Information
relative to debt is identified in Note 16 to the basic financial statements.
Federal Investigation
On July 28, 2008, agents of the Federal Bureau of Investigation and the Internal Revenue Service executed
search warrants at certain County government offices, the homes of certain County officials, and the business
offices of certain private contractors in connection with what has been characterized as a “government
corruption investigation” (the “Investigation”). Additional search warrants were executed on September 23,
2008 at the offices of two County Judges. In addition, pursuant to the investigation, several Federal Grand
Jury subpoenas for the production of documents were issued to the government offices of a County
Commissioner, the County Auditor, the County Engineer and the County Information Services Office. The
County has complied with the search warrants and continues to cooperate with the Investigation. Since the
initial searches, multiple criminal charges have been filed in the United States District Court for the Northern
District of Ohio charging former county employees, public officials and other individuals with soliciting and
- 11 -
(Unaudited)
receiving bribes. Several former county employees and public officials including the former County Auditor
have pleaded guilty to such charges and have been sentenced or are awaiting sentencing on such charges. A
former County Commissioner and two former judges were convicted and sentenced. Additional criminal
cases are pending.
In response to the Investigation, the County retained the services of a law firm to assist the County in its
internal investigation of County contracting procedures and awards and other matters related to the
Investigation. On October 28, 2009, the law firm issued a report regarding the internal review and
investigation. The Board of County Commissioners accepted the report on October 29, 2009, and its
conclusions were endorsed and adopted by the Board. The report was updated by means of supplemental
reports submitted in December 2009 and October 2011, which took into account subsequent public
corruption charges filed against other individuals.
The report concluded that in spite of the conduct of the individuals named in charges resulting from the
Investigation, it is highly unlikely that such outcome will materially affect the fair presentation of the
County's basic financial statements. In addition, the report concluded that given the amount of funds
involved, the possibility that the County's overall financial position or operations would be materially
impacted by any of the activities uncovered in the federal public corruption investigation is remote.
The federal public corruption investigation is still ongoing, however, based upon the County's own internal
investigation, the County believes the likelihood of the Investigation resulting in any material potential loss
or liability, including the possibility of significant disallowance findings related to Federal and State assisted
grant programs, is remote; and that any adverse outcome from these charges would pertain to the County
officials and former employees subject to the investigation rather than the County itself.
Current Issues
Cuyahoga County has continued to maintain the highest standards of services to our communities while
diligently managing expenses, to stay within the County’s revenues. As with all counties in the State of
Ohio, State funding issues are constantly monitored to determine the impact on the County. As the preceding
information shows, Cuyahoga County, like most counties in Ohio, is heavily reliant on sales tax and local
property taxpayers. Additional revenues must not be treated as a windfall to expand programs but as an
opportunity to extend the time horizon of the life of the various social and health and human services levies
and provide future flexibility for the general fund. All of the County’s financial abilities will be needed to
meet the challenges of the future.
In conclusion, Cuyahoga County is in a period posing both significant challenges and opportunities.
Management is committed to working with all stakeholders to craft solutions that will most effectively use
the available resources to continue to provide excellent services to the residents of the County.
Contacting the County’s Financial Management
This financial report is designed to provide a general overview of the County’s finances for all those with an
interest in the government’s finances. Questions concerning any of the information provided in this report or
request for additional financial information should be addressed to the Office of Fiscal Officer, Cuyahoga
County, 1219 Ontario Street, 2nd Floor, Cleveland, Ohio 44113.
- 12 -
Statement of Net Assets
December 31, 2011
Primary Government
Assets
Equity in Pooled Cash and Cash Equivalents
Cash and Cash Equivalents:
In Segregated Accounts
With Fiscal Agents
Investments
Materials and Supplies Inventory
Accrued Interest Receivable
Accounts Receivable
Other Receivable
Internal Balances
Intergovernmental Receivable
Prepaid Items
Sales Taxes Receivable
Property Taxes Receivable
Special Assessments Receivable
Loans Receivable
Other Assets
Deferred Charges
Nondepreciable Capital Assets
Depreciable Capital Assets, Net
Total Assets
Governmental
Activities
Business-Type
Activities
$516,908,184
$28,820,723
$545,728,907
$7,164,000
0
0
0
15,178
0
294,444
0
200,605
78,603
0
0
0
30,229,927
0
0
7,360
12,385,832
43,876,873
14,360,750
314,946,271
0
72,598
2,461,026
5,420,972
0
0
95,006,177
0
59,376,415
341,255,779
30,229,927
155,053,854
0
4,920,834
508,900,053
465,525,069
0
0
413,161,000
9,297,000
0
79,540,000
23,149,000
0
0
3,594,000
0
0
0
0
10,504,000
0
16,401,000
245,261,000
2,427,349,087
115,909,545
2,543,258,632
808,071,000
53,673,789
14,122,727
16,732,161
0
8,865,375
2,213,118
3,135,109
19,633,088
0
337,754,245
653,967
257,132
518,745
0
39,289
92,322
15,598
0
93,935
0
54,327,756
14,379,859
17,250,906
0
8,904,664
2,305,440
3,150,707
19,633,088
93,935
337,754,245
31,116,000
34,493,000
0
8,987,000
8,504,000
0
3,315,000
0
0
0
80,945,909
866,276,203
903,461
17,046,098
81,849,370
883,322,301
43,475,000
323,719,000
1,403,351,724
19,620,547
1,422,972,271
453,609,000
490,052,134
39,027,092
529,079,226
54,306,000
63,865,390
48,562,052
49,807,125
129,148,297
64,551,876
41,921,153
57,757,294
0
0
0
0
0
0
0
63,865,390
48,562,052
49,807,125
129,148,297
64,551,876
41,921,153
57,757,294
0
0
0
0
0
0
0
0
0
78,332,042
0
0
57,261,906
0
0
135,593,948
48,517,000
8,998,000
242,641,000
$1,023,997,363
$96,288,998
$1,120,286,361
$354,462,000
14,360,750
314,946,271
0
57,420
2,461,026
5,126,528
0
(200,605)
94,927,574
0
59,376,415
341,255,779
0
155,053,854
0
4,913,474
496,514,221
421,648,196
Liabilities
Accounts Payable
Accrued Wages
Contracts Payable
Other Liabilities
Intergovernmental Payable
Retainage Payable
Accrued Interest Payable
Claims Payable
Unearned Revenue
Deferred Revenue
Long-Term Liabilities:
Due Within One Year
Due In More Than One Year
Total Liabilities
Net Assets
Invested in Capital Assets, Net of Related Debt
Restricted for:
Capital Projects
Health and Human Services
Motor Vehicle
Developmental Disabilities
Community Development Programs
Children's Services
Other Purposes
MetroHealth System
Expendable
Nonexpendable
Unrestricted
Total Net Assets
Component Unit
(1) Dollars rounded to the nearest thousands
See accompanying notes to the basic financial statements
- 13 -
Total
MetroHealth
System (1)
Statement of Activities
Program Revenues
Expenses
Primary Government
Governmental Activities:
General Government:
Judicial
Public Works
Health and Safety Services
Social Services
Charges
for Services
and Operating
Assessments
Operating Grants
and Contributions
Capital Grants
and Contributions
$91,462,479
323,452,320
31,655,075
230,988,876
482,461,722
48,417,824
59,301,229
$20,018,902
64,496,402
2,308,754
1,809,165
5,947,689
1,098,295
0
$2,299,931
54,516,811
38,373,885
153,283,926
286,022,645
40,211,181
0
$7,012,850
0
25,982,722
0
0
26,354,222
0
1,267,739,525
95,679,207
574,708,379
59,349,794
Business-Type Activities:
Sanitary Engineer
Airport
Parking Garage
Information Systems
20,949,553
1,758,577
3,592,320
1,749,095
22,809,722
685,068
4,039,055
1,497,294
0
0
0
0
0
144,048
0
0
Total Business-Type Activities
28,049,545
29,031,139
0
144,048
$1,295,789,070
$124,710,346
$574,708,379
$59,493,842
$768,572,000
$676,785,000
$49,269,000
$680,000
Total Governmental Activities
Total - Primary Government
Component Unit
MetroHealth System (1)
General Revenues
Property Taxes
General Purposes
General Obligation Bond Retirement
Health & Human Services
Children's Services
Real Estate Tax Assessment
Sales Taxes
General Purposes
Hotel/Lodging Tax
Payments in Lieu of Taxes
Grants and Entitlements not Restricted to Specific Programs
Interest
Other
Total General Revenues
Transfers
Total General Revenues and Transfers
Net Assets Beginning of Year - Restated (See Note 3)
(1) Dollars rounded to the nearest thousands
- 14 -
Net (Expense) Revenue and Changes in Net Assets
Primary Government
Governmental
Activities
Business-Type
Activities
Component
Unit
Total
($62,130,796)
(204,439,107)
35,010,286
(75,895,785)
(190,491,388)
19,245,874
(59,301,229)
$0
0
0
0
0
0
0
($62,130,796)
(204,439,107)
35,010,286
(75,895,785)
(190,491,388)
19,245,874
(59,301,229)
$0
0
0
0
0
0
0
(538,002,145)
0
(538,002,145)
0
0
0
0
0
1,860,169
(929,461)
446,735
(251,801)
1,860,169
(929,461)
446,735
(251,801)
0
0
0
0
0
1,125,642
1,125,642
0
(538,002,145)
1,125,642
(536,876,503)
0
0
0
14,229,330
27,897,033
152,057,954
37,180,322
92,243,940
13,831,361
0
0
0
0
0
0
14,229,330
27,897,033
152,057,954
37,180,322
92,243,940
13,831,361
242,076,865
12,391,398
4,987,506
65,890,384
12,812,138
27,404,518
0
0
0
0
14,729
234,593
242,076,865
12,391,398
4,987,506
65,890,384
12,826,867
27,639,111
0
0
0
0
(5,819,000)
46,204,000
703,002,749
249,322
703,252,071
40,385,000
252,071
0
0
702,750,678
501,393
703,252,071
40,385,000
164,748,533
1,627,035
166,375,568
(1,453,000)
859,248,830
94,661,963
953,910,793
355,915,000
$1,023,997,363
$96,288,998
$1,120,286,361
$354,462,000
(252,071)
- 15 -
0
(41,838,000)
0
0
0
0
0
0
Balance Sheet
Governmental Funds
December 31, 2011
Human
Services
General
Assets
Equity in Pooled Cash and
Cash Equivalents
Cash and Cash Equivalents:
In Segregated Accounts
Accrued Interest Receivable
Accounts Receivable
Interfund Receivable
Sales Taxes Receivable
Loans Receivable
Restricted Assets:
Cash Equivalents
Cash Equivalents with Fiscal Agent
Health
and Human
Services Levy
County
Board of
Developmental
Disabilities
$110,997,700
$1,741,457
$46,810,758
$127,075,270
3,102,779
824,043
1,545,868
75,292,056
17,835,477
59,376,415
15,155,751
1,250,000
0
0
312,056
0
16,767,189
0
65,295,036
0
0
0
77,476
0
3,946,649
0
56,463,254
0
103,834
0
0
0
10,618,341
0
95,118,158
0
7,924,464
0
0
0
0
0
0
0
$293,304,553
$84,115,738
$107,298,137
$232,915,603
Liabilities
Accounts Payable
Accrued Wages
Contracts Payable
Retainage Payable
Interfund Payable
Deferred Revenue
$3,072,841
5,623,943
0
0
874,076
1,807,566
50,382,553
$6,678,668
3,072,398
0
0
480,156
911,643
81,565,019
$2,161,138
212,408
0
0
32,454
74,917
60,391,064
$3,357,090
2,594,930
0
0
633,466
551,422
101,932,713
Total Liabilities
61,760,979
92,707,884
62,871,981
109,069,621
Fund Balances
Nonspendable
Restricted
Assigned
Unassigned (Deficit)
8,924,464
0
6,929,678
215,689,432
0
0
0
(8,592,146)
0
44,426,156
0
0
0
123,845,982
0
0
Total Fund Balances (Deficit)
231,543,574
(8,592,146)
44,426,156
123,845,982
$107,298,137
$232,915,603
Total Assets
Total Liabilities and Fund Balances
$293,304,553
- 16 -
$84,115,738
Alcohol, Drug
and Mental
Health Board
Global
Center for
Health
Innovation
Capital
Projects
Other
Governmental
Funds
Total
Governmental
Funds
$8,476,295
$0
$0
$157,533,410
$452,634,890
0
0
289,875
0
7,231,474
0
30,156,173
0
0
0
17,410
0
0
0
0
0
0
0
0
0
0
0
0
103,833,568
11,154,137
1,636,983
2,883,843
0
37,283,197
0
79,067,407
49,970,286
14,360,750
2,461,026
5,126,528
75,292,056
93,682,327
59,376,415
341,255,779
155,053,854
0
0
0
0
7,924,464
0
0
309,711,882
5,234,389
314,946,271
$46,153,817
$17,410
$413,545,450
$344,763,652
$1,522,114,360
$15,721,008
98,361
0
0
15,029
23,363
32,403,121
$401,829
0
567,653
95,014
0
73,099,821
0
$0
0
13,644,181
0
0
0
0
$18,069,264
1,568,182
2,520,327
2,118,104
459,816
960,017
96,829,391
$49,461,838
13,170,222
16,732,161
2,213,118
2,494,997
77,428,749
423,503,861
48,260,882
74,164,317
13,644,181
122,525,101
585,004,946
0
0
0
(2,107,065)
0
0
0
(74,146,907)
0
399,901,269
0
0
0
224,617,739
0
(2,379,188)
8,924,464
792,791,146
6,929,678
128,464,126
(2,107,065)
(74,146,907)
399,901,269
222,238,551
937,109,414
$413,545,450
$344,763,652
$1,522,114,360
$46,153,817
$17,410
- 17 -
Reconciliation of Total Governmental Fund Balances to
Net Assets of Governmental Activities
December 31, 2011
Total Governmental Fund Balances
$937,109,414
Amounts reported for governmental activities in the
statement of net assets are different because
Capital assets used in governmental activities are not financial resources and
therefore are not reported in the funds.
918,162,417
Other long-term assets are not available to pay for current-period expenditures
and therefore are deferred in the funds:
Property Taxes
3,501,534
Sales Taxes
23,338,976
Intergovernmental
58,088,179
Charges for Services
13,435
Special Assessments
40,825
Other
766,667
Total
85,749,616
Internal service funds are used by management to charge costs to individual
funds. The assets and liabilities of the internal service funds are included in
governmental activities in the statement of net assets.
Net Assets
34,080,633
Internal Balances
(619,178)
Capital Assets
(6,979,475)
940,785
996,898
Total
28,419,663
In the statement of activities, bond issuance costs are amortized over the term of
the bonds, whereas in governmental funds a bond issuance expenditure is
reported when bonds are issued.
4,913,474
In the statement of activities, interest is accrued on outstanding bonds and notes,
whereas in governmental funds, an interest expenditure is reported when due.
(3,135,109)
Long-term liabilities are not due and payable in the current period and therefore
are not reported in the funds:
Voted General Obligation Bonds
(11,483,004)
Unvoted General Obligation Bonds
(297,256,552)
Revenue Bonds
(464,266,354)
Loans Payable
(8,400,546)
Capital Lease Payable
(120,082,346)
Notes Payable
(9,300,000)
(9,603,629)
(26,829,681)
Total
(947,222,112)
Net Assets of Governmental Activities
$1,023,997,363
- 18 -
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
County
Health
Board of
and Human Developmental
Services Levy
Disabilities
Alcohol, Drug
and Mental
Health Board
General
Human
Services
Revenues
Property Taxes
Sales Tax
Hotel/Lodging Tax
Payment in Lieu of Taxes
Licenses and Permits
Fines and Forfeitures
Intergovernmental
Interest
Contributions and Donations
Other
$14,183,988
218,737,889
0
0
60,750,929
55,100
10,003,020
47,085,138
9,864,848
0
9,119,484
$53,079,964
0
0
0
408,654
0
0
114,012,759
0
50,000
3,458,899
$64,926,453
0
52,760
0
48
0
0
13,645,239
0
0
158,801
$92,035,920
0
26,426
0
3,816,983
0
0
99,926,858
518,491
0
2,394,148
$27,895,114
0
0
0
18,385
0
0
130,428,340
0
224,869
4,228,068
Total Revenues
369,800,396
171,010,276
78,783,301
198,718,826
162,794,776
55,859,119
224,586,434
0
175,251
6,361,744
4,801,049
0
0
0
0
0
191,828,682
0
0
0
23,216,527
0
36,077,021
5,525,583
1,335,272
0
0
0
0
0
195,616,692
0
0
0
0
0
171,946,388
0
0
0
500,000
0
0
4,560,007
2,457,165
0
0
0
0
0
0
0
0
0
0
292,283,597
198,845,854
66,154,403
195,616,692
171,946,388
77,516,799
(27,835,578)
12,628,898
3,102,134
Expenditures
Current:
General Government:
Judicial
Public Works
Health and Safety
Social Services
Capital Outlay
Debt Service:
Principal Retirement
Capital Appreciation Bonds Interest
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
(9,151,612)
Other Financing Sources (Uses)
Inception of Capital Lease
ODOT Loans Issued
General Obligation Notes Issued
Transfers In
Transfers Out
0
0
0
328,278
(49,047,773)
0
0
0
175,000
0
0
0
0
147,001
(72,842)
0
0
0
0
0
0
0
0
231,738
0
Total Other Financing Sources (Uses)
(48,719,495)
175,000
74,159
0
231,738
Net Change in Fund Balances
Fund Balances Beginning
of Year - Restated (See Note 3)
Fund Balances (Deficit) End of Year
28,797,304
(27,660,578)
12,703,057
3,102,134
(8,919,874)
202,746,270
19,068,432
31,723,099
120,743,848
6,812,809
$231,543,574
($8,592,146)
$44,426,156
$123,845,982
($2,107,065)
(continued)
- 19 -
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds (continued)
Capital
Projects
Global
Center for
Health
Innovation
Revenues
Property Taxes
Sales Tax
Hotel/Lodging Tax
Payment in Lieu of Taxes
Intergovernmental
Interest
Other
$0
0
0
0
337
0
0
7,012,850
108,471
0
168,438
Total Revenues
Other
Governmental
Funds
Total
Governmental
Funds
$0
0
0
0
0
0
0
0
17,854,222
0
279,000
$86,150,295
0
12,312,212
4,987,506
15,553,803
1,777,143
3,240,545
216,074,064
2,400,180
1,790,060
5,631,687
$338,271,734
218,737,889
12,391,398
4,987,506
80,549,139
1,832,243
13,243,565
628,185,248
30,746,212
2,064,929
25,438,525
7,290,096
18,133,222
349,917,495
1,356,448,388
0
0
0
0
0
0
24,558,156
0
0
0
0
0
0
135,710,964
27,086,132
64,441,685
22,868,635
17,460,386
76,757,057
42,287,226
36,359,917
82,945,251
312,244,646
22,868,635
225,659,046
476,089,758
48,423,547
196,629,037
0
0
0
18,233,215
17,850,403
0
40,503,784
38,526,709
5,156,894
63,797,006
58,834,277
5,156,894
24,558,156
171,794,582
371,448,425
1,492,648,097
(17,268,060)
(153,661,360)
(21,530,930)
(136,199,709)
ODOT Loans Issued
Transfers In
Transfers Out
0
0
0
11,828,903
0
122,066,783
0
0
40,174,080
(19,480,872)
0
76,865
10,320,000
34,484,530
(15,075,352)
122,066,783
76,865
10,320,000
87,369,530
(83,676,839)
11,828,903
142,759,991
29,806,043
136,156,339
(5,439,157)
(10,901,369)
8,275,113
(68,707,750)
410,802,638
213,963,438
937,152,784
($74,146,907)
$399,901,269
$222,238,551
$937,109,414
Expenditures
Current:
General Government:
Judicial
Public Works
Health and Safety
Social Services
Capital Outlay
Debt Service:
Capital Appreciation Bonds Interest
Total Expenditures
Fund Balances Beginning
- 20 -
(43,370)
Reconciliation of the Statement of Revenues, Expenditures and Changes
in Fund Balances of Governmental Funds to the Statement of Activities
Net Change in Fund Balances - Total Governmental Funds
($43,370)
Amounts reported for governmental activities in the statement of activities are different because
Governmental funds report capital outlays as expenditures. However, in the statement of activities, the
cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the
amount by which capital outlay exceeds depreciation in the current period:
Capital Asset Additions:
Capital Outlay
193,226,700
Capital Contribution
8,500,000
Depreciation
(31,423,584)
Total
170,303,116
Governmental funds only report the disposal of capital assets to the extent proceeds are received from
the sale. In the statement of activities, a gain or loss is reported for each disposal.
(1,891,753)
Revenues in the statement of activities that do not provide current financial resources are not reported
as revenue in the funds:
Property Taxes
(831,794)
Sales Taxes
23,338,976
Intergovernmental
43,264,306
13,435
Special Assessments
40,825
Other
766,667
Total
66,592,415
Repayment of long-term obligations is an expenditure in the governmental funds, but the repayment
reduces long-term liabilities in the statement of net assets.
68,995,653
Some expenses reported in the statement of activities do no require the use of current financial
resources and therefore are not reported as expenditures in governmental funds.
Accrued Interest on Bonds
369,720
Amortization of Premium
1,158,843
Amortization of Accretion
(1,827,424)
Amortization of Issuance Costs
(164,711)
Total
(463,572)
Some expenses reported in the statement of activities, do not require the use of current financial
resources and therefore are not reported as expenditures in governmental funds.
(695,524)
18,486,688
17,791,164
Total
Internal service funds used to charge costs to individual funds are not reported in the County-wide
statement of activities. Governmental fund expenditures and related internal service funds revenues
are eliminated. The net revenue (expense) of the internal service funds are allocated among the
governmental and business-type activities.
(25,238,128)
Change in Internal Balance
426,822
Change in Capital Assets
2,098,870
Change in Special Termination Benefits
(2,314,182)
Change in Compensated Absences
996,899
Principal Retirement on Capital Leases
(41,753)
Total
(24,071,472)
Other financing sources in the governmental funds increase long-term liabilities in the statement of
net assets.
Loans Issued
(76,865)
(10,320,000)
(122,066,783)
Total
(132,463,648)
Change in Net Assets of Governmental Activities
$164,748,533
- 21 -
Statement of Revenues, Expenditures and
Changes in Fund Balance - Budget and Actual
General
Budget Basis
Original
Budget
Final
Budget
Actual
Variance with
Final Budget
Positive
(Negative)
Revenues
Property Taxes
Sales Tax
Intergovernmental
Interest
Other
$13,915,788
212,493,847
48,769,895
54,058
9,942,265
48,126,888
12,288,661
9,669,089
$13,915,788
212,493,847
48,769,895
54,058
9,942,265
48,126,888
12,288,661
9,669,089
$14,183,988
216,589,257
54,159,650
55,100
9,587,386
49,060,268
12,525,501
17,839,858
Total Revenues
355,260,491
355,260,491
374,001,008
18,740,517
55,337,229
204,317,476
197,129
6,670,357
30,035,126
537,949
62,883,316
244,686,824
225,622
7,797,211
34,826,913
537,949
58,385,236
231,433,009
208,144
6,451,437
28,909,494
493,065
4,498,080
13,253,815
17,478
1,345,774
5,917,419
44,884
497,665
542,545
500,000
42,545
297,592,931
351,500,380
326,380,385
25,119,995
57,667,560
3,760,111
47,620,623
43,860,512
Transfers In
Transfers Out
180,264
(24,573,570)
180,264
(29,456,174)
328,278
(25,750,448)
148,014
3,705,726
(24,393,306)
(29,275,910)
(25,422,170)
3,853,740
33,274,254
(25,515,799)
22,198,453
47,714,252
156,456,773
8,145,086
156,456,773
8,145,086
156,456,773
8,145,086
0
0
$197,876,113
$139,086,060
$186,800,312
$47,714,252
Expenditures
Current:
General Government:
Judicial
Health and Safety
Social Services
Other
Debt Service:
Total Expenditures
Excess of Revenues Over Expenditures
Net Change in Fund Balance
Fund Balances Beginning of Year
Prior Year Encumbrances Appropriated
Fund Balances End of Year
- 22 -
$268,200
4,095,410
5,389,755
1,042
(354,879)
933,380
236,840
8,170,769
Human Services
Budget Basis
Variance with
Final Budget
Original
Final
Budget
Budget
Positive
Actual
(Negative)
Revenues
Property Taxes
$64,031,319
Intergovernmental
$64,031,319
$53,079,963
($10,951,356)
547,482
547,482
408,654
(138,828)
138,061,032
152,538,356
125,757,691
(26,780,665)
48,450
48,450
50,000
1,550
4,397,974
4,397,974
3,132,210
(1,265,764)
207,086,257
221,563,581
182,428,518
(39,135,063)
240,917,048
239,892,039
234,854,218
5,037,821
(33,830,791)
(18,328,458)
(52,425,700)
(34,097,242)
234,451
234,451
175,000
(59,451)
(33,596,340)
(18,094,007)
(52,250,700)
(34,156,693)
Fund Deficit Beginning of Year
(21,339,219)
(21,339,219)
(21,339,219)
0
39,907,128
39,907,128
39,907,128
0
($15,028,431)
$473,902
($33,682,791)
($34,156,693)
Other
Total Revenues
Expenditures
Current:
Social Services
Other Financing Sources
Transfers In
Fund Deficit End of Year
- 23 -
Health and Human Services Levy
Budget Basis
Original
Budget
Final
Budget
Actual
Variance with
Final Budget
Positive
(Negative)
Revenues
Property Taxes
Hotel/Lodging Tax
Intergovernmental
Other
$94,288,674
52,760
56
19,634,635
65,893
$94,288,674
52,760
56
19,634,635
65,893
$64,930,176
52,760
48
13,622,677
81,325
($29,358,498)
0
(8)
(6,011,958)
15,432
Total Revenues
114,042,018
114,042,018
78,686,986
(35,355,032)
Expenditures
Current:
General Government:
Judicial
Health and Safety
Social Services
27,390,121
41,299,005
6,926,567
6,978,038
29,964,897
68,705,233
8,135,912
2,092,420
27,156,601
36,080,000
7,439,228
2,091,849
2,808,296
32,625,233
696,684
571
Total Expenditures
82,593,731
108,898,462
72,767,678
36,130,784
Excess of Revenues Over Expenditures
31,448,287
5,143,556
5,919,308
775,752
Transfers In
Transfers Out
147,001
(80,000)
147,001
(80,000)
147,001
(72,842)
0
7,158
67,001
67,001
74,159
7,158
31,515,288
5,210,557
5,993,467
782,910
26,493,877
7,312,217
26,493,877
7,312,217
26,493,877
7,312,217
0
0
$65,321,382
$39,016,651
$39,799,561
$782,910
- 24 -
County Board of Developmental Disabilities
Budget Basis
Original
Budget
Final
Budget
Actual
Variance with
Final Budget
Positive
(Negative)
Revenues
Property Taxes
Hotel/Lodging Tax
Intergovernmental
Interest
Other
$96,754,950
26,426
3,903,536
106,184,585
545,076
2,565,644
$96,754,950
26,426
3,903,536
106,184,585
545,076
2,565,644
$92,035,920
26,426
3,713,149
101,004,354
518,491
2,440,510
($4,719,030)
0
(190,387)
(5,180,231)
(26,585)
(125,134)
Total Revenues
209,980,217
209,980,217
199,738,850
(10,241,367)
Expenditures
Current:
Social Services
208,766,045
208,766,045
202,784,596
5,981,449
1,214,172
1,214,172
115,004,162
7,943,729
115,004,162
7,943,729
115,004,162
7,943,729
$124,162,063
$124,162,063
$119,902,145
- 25 -
(3,045,746)
(4,259,918)
0
0
($4,259,918)
Alcohol, Drug and Mental Health Board
Budget Basis
For the Fiscal Year Ended June 30, 2011
Variance with
Final Budget
Positive
(Negative)
Original
Budget
Final
Budget
Revenues
Property Taxes
Intergovernmental
Other
$35,014,112
123,520,393
2,898,750
$35,014,112
123,520,393
2,898,750
$34,701,442
129,637,618
4,646,183
($312,670)
6,117,225
1,747,433
Total Revenues
161,433,255
161,433,255
168,985,243
7,551,988
Expenditures
Current:
Health and Safety
168,500,000
168,500,000
168,434,877
65,123
550,366
7,617,111
Actual
(7,066,745)
(7,066,745)
7,349,431
7,349,431
7,349,431
0
$282,686
$282,686
$7,899,797
$7,617,111
- 26 -
Statement of Fund Net Assets
Proprietary Funds
December 31, 2011
Enterprise Funds
Sanitary
Engineer
Assets
Current Assets:
Accounts Receivable
All Other
Enterprise
Funds
Total
Internal
Service
$28,055,471
0
0
0
30,229,927
0
$765,252
15,178
78,603
294,444
0
15,250
$28,820,723
15,178
78,603
294,444
30,229,927
15,250
$56,348,830
57,420
1,245,247
0
0
4,486,423
58,285,398
1,168,727
59,454,125
62,137,920
Total Current Assets
Noncurrent Assets:
Deferred Charges
Capital Assets:
Depreciable Capital Assets, Net
7,360
0
7,360
0
567,495
34,085,979
11,818,337
9,790,894
12,385,832
43,876,873
0
6,979,475
Total Noncurrent Assets
34,660,834
21,609,231
56,270,065
6,979,475
Total Assets
92,946,232
22,777,958
115,724,190
69,117,395
470,441
199,469
518,745
30,478
92,322
105,479
0
16,334
15,598
0
430,000
291,235
103,926
0
183,526
57,663
0
8,811
0
328,344
93,935
6,084
0
55,882
0
0
0
0
653,967
257,132
518,745
39,289
92,322
433,823
93,935
22,418
15,598
55,882
430,000
291,235
103,926
0
4,211,951
952,505
0
6,370,378
0
1,931,157
0
34,343
0
940,785
0
0
0
19,633,088
2,274,027
734,245
3,008,272
34,074,207
Long-Term Liabilities (net of current portion):
Compensated Absences Payable
General Obligation Bonds Payable
OWDA Loans Payable
OPWC Loans Payable
457,779
3,765,000
12,176,181
476,631
170,507
0
0
0
628,286
3,765,000
12,176,181
476,631
962,555
0
0
0
Total Long-Term Liabilities
16,875,591
170,507
17,046,098
962,555
Total Liabilities
19,149,618
904,752
20,054,370
35,036,762
Net Assets
Invested in Capital Assets, Net of Related Debt
Unrestricted
17,417,861
56,378,753
21,609,231
263,975
39,027,092
56,642,728
6,979,475
27,101,158
$73,796,614
$21,873,206
95,669,820
$34,080,633
Liabilities
Current Liabilities:
Accounts Payable
Accrued Wages
Contracts Payable
Retainage Payable
Interfund Payable
Unearned Revenue
Accrued Interest Payable
Special Termination Benefits Payable
General Obligation Bonds Payable
OWDA Loans Payable
OPWC Loans Payable
Claims Payable
Total Current Liabilities
Total Net Assets
Net assets reported for business-type activities in the statement of net
assets are different because they include accumulated overpayments
to the internal service funds:
Net assets of business-type activities
619,178
$96,288,998
- 27 -
Statement of Revenues,
Expenses and Changes in Fund Net Assets
Proprietary Funds
Enterprise Funds
Sanitary
Engineer
Operating Revenues
Tap-In Fees
Other
All Other
Enterprise
Funds
Total
Internal
Service
$22,163,122
646,600
145,355
$6,221,417
0
89,238
$28,384,539
646,600
234,593
$146,579,643
0
1,199,326
22,955,077
6,310,655
29,265,732
147,778,969
8,084,612
3,089,821
6,803,457
1,969,221
247,267
2,630,470
201,862
2,404,933
992,671
667,852
10,715,082
3,291,683
9,208,390
2,961,892
915,119
38,674,819
15,431,230
103,682,551
2,112,036
9,294,899
Total Operating Expenses
20,194,378
6,897,788
27,092,166
169,195,535
Operating Income (Loss)
2,760,699
2,173,566
(21,416,566)
Total Operating Revenues
Operating Expenses
Personal Services
Materials and Supplies
Contractual Services and Claims
Depreciation
Other
(587,133)
Non-Operating Revenues (Expenses)
Interest
0
(530,557)
14,729
0
14,729
(530,557)
Total Non-Operating Revenues (Expenses)
(530,557)
14,729
(515,828)
0
(3,380)
.
Income (Loss) before Transfers and
Capital Contributions
Capital Contributions
Transfers In
Transfers Out
Net Assets Beginning
2,230,142
0
0
(200,000)
(572,404)
270,628
918,491
(593,000)
1,657,738
270,628
918,491
(793,000)
(21,419,946)
0
1,093,547
(4,911,729)
2,030,142
23,715
71,766,472
21,849,491
59,318,761
$73,796,614
$21,873,206
$34,080,633
Some amounts reported for business-type activities in the statement
of activities are different because a portion of the net expense of the
internal service funds is reported with business-type activities.
Change in net assets of business-type activities
2,053,857
(3,380)
(426,822)
$1,627,035
- 28 -
(25,238,128)
Statement of Cash Flows
Proprietary Funds
Enterprise Funds
All Other
Enterprise
Funds
Sanitary
Engineer
Total
Internal
Service
Increase in Cash and Cash Equivalents
Cash Flows from Operating Activities
Cash Received from Customers
Cash Received from Interfund Transactions
Other Cash Receipts
Cash Payments to Employees for Services
Cash Payments for Goods and Services
Other Cash Payments
$20,515,050
0
145,355
(8,273,127)
(8,926,615)
(344,849)
Net Cash Provided by (Used in) Operating Activities
3,115,814
$6,208,450
0
89,238
(2,606,356)
(2,557,813)
(1,280,693)
(147,174)
$26,723,500
0
234,593
(10,879,483)
(11,484,428)
(1,625,542)
2,968,640
$0
148,742,432
1,199,326
(39,234,060)
(116,044,826)
(12,504,146)
(17,841,274)
Cash Flows from Noncapital Financing Activities
Advances In
Advances Out
Transfers In
Transfers Out
0
0
0
(200,000)
312,373
(505,271)
918,491
(593,000)
312,373
(505,271)
918,491
(793,000)
1,469,746
(41,008)
1,093,547
(4,911,729)
Net Cash Provided by (Used in) Noncapital Financing Activities
(200,000)
132,593
(67,407)
(2,389,444)
Cash Flows from Capital and Related Financing Activities
Related Financing Activities
Capital Grants
Proceeds from OPWC Loans
Proceeds from OWDA Loans
Principal Paid on General Obligation Bonds
Interest Paid on General Obligation Bonds
Principal Paid on OPWC Loans
Principal Paid on OWDA Loans
Interest Paid on OWDA Loans
Principal Paid on Capital Leases
Interest Paid on Capital Leases
Payments for Capital Acquisitions
0
18,367
4,868,596
(415,000)
(189,176)
(123,565)
(587,553)
(318,623)
0
0
(161,063)
144,048
0
0
0
0
0
0
0
0
0
0
144,048
18,367
4,868,596
(415,000)
(189,176)
(123,565)
(587,553)
(318,623)
0
0
(161,063)
0
0
0
0
0
0
0
0
(41,753)
(3,380)
(13,166)
Net Cash Provided by (Used in) Capital and
Related Financing Activities
3,091,983
144,048
3,236,031
(58,299)
0
14,729
14,729
6,007,797
144,196
6,151,993
(20,289,017)
22,047,674
621,056
22,668,730
76,637,847
$28,055,471
$765,252
$28,820,723
$56,348,830
Cash Flows from Investing Activities
Interest on Investments
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents Beginning of Year
Cash and Cash Equivalents End of Year
0
(continued)
- 29 -
Statement of Cash Flows
Proprietary Funds (continued)
Enterprise Funds
Sanitary
Engineer
All Other
Enterprise
Funds
Total
Internal
Service
Reconciliation of Operating Income (Loss) to Net
Cash Provided by (Used in) Operating Activities
Operating Income (Loss)
Adjustments:
Depreciation
(Increase) Decrease in Assets:
Accounts Receivable
Increase (Decrease) in Liabilities:
Accounts Payable
Accrued Wages
Contracts Payable
Retainage Payable
Interfund Payable
Unearned Revenue
Claims Payable
$2,760,699
($587,133)
$2,173,566
1,969,221
992,671
2,961,892
2,112,036
0
0
0
0
(2,294,672)
1,051
38,272
(129,456)
(10,250)
(2,294,672)
(27,200)
(901,288)
12,786
3,051,291
0
256,106
(144,642)
518,745
30,478
92,322
7,727
0
(80,170)
0
0
1,051
38,272
(129,456)
(10,250)
0
0
(389,010)
(1,197)
0
8,811
0
(15,613)
93,935
(29,861)
(119,394)
0
(132,904)
(145,839)
518,745
39,289
92,322
(7,886)
93,935
(110,031)
(119,394)
0
(1,479,188)
(2,427,180)
0
897,232
0
(170,157)
0
996,898
(2,314,181)
3,824,243
355,115
439,959
795,074
3,575,292
Total Adjustments
Net Cash Provided by (Used in) Operating Activities
$3,115,814
($147,174)
Noncash Capital Financing Activities
During 2011, the capital projects fund paid $126,580 for HVAC units and runway lighting replacement for
the Airport enterprise fund. These amounts are included in capital contributions.
- 30 -
$2,968,640
($21,416,566)
($17,841,274)
Statement of Fiduciary Assets and Liabilities
Agency Funds
December 31, 2011
Assets
Cash and Cash Equivalents in Segregated Accounts
$187,454,454
46,334,668
1,617,335,837
93,206,336
Total Assets
$1,944,331,295
Liabilities
Undistributed Monies
Deposits Held and Due to Others
$1,891,400,800
52,930,495
Total Liabilities
$1,944,331,295
- 31 -
(This Page Intentionally Left Blank)
- 32 -
Notes to the Basic Financial Statements
Note 1 - Description of Cuyahoga County and Reporting Entity
Cuyahoga County (the County) operates as a political subdivision of the State of Ohio. The County was
formed by an act of the Ohio General Assembly in 1810. On November 3, 2009, the voters of the County-atlarge adopted a Charter form of government. The new Charter replaces the Commissioners with an elected
County Executive and eleven-member Council. The elected offices of Auditor, Treasurer, Recorder, Clerk of
Courts, Engineer, Sheriff and Coroner were replaced by non-elected appointees of the County Executive with
approval by Council. The charter provides for the separation of administrative and legislative powers. The
effective date of the charter was January 1, 2010. In addition, the new County Executive has created the
Office of Inspector General which is responsible for investigation of any allegations of wrongdoing. To read
the entire charter, please refer to http://council.cuyahogacounty.us/en-US/charter-cuyahogacounty.aspx.
The Prosecutor and the County Judges will remain elected positions. There are thirty-four Common Pleas
Court Judges, five Domestic Relations Court Judges, six Juvenile Court Judges, two Probate Court Judges and
twelve Court of Appeals Judges elected on a County-wide basis to oversee the County's justice system.
Although these elected officials manage the internal operations of their respective departments, the County
Council authorizes expenditures as well as serves as the budget and taxing authority, contracting body, and the
chief administrators of public services for the County, including each of these departments.
Reporting Entity
A reporting entity is comprised of the primary government, component units and other organizations that are
included to ensure that the financial statements are not misleading. The primary government consists of all
funds, departments, boards and agencies that are not legally separate from the County. For Cuyahoga County,
this includes the Children's Services Board, the Board of Developmental Disabilities, the Board of Mental
Health and Recovery Services and all departments and activities that are directly operated by the elected
County officials.
Component units are legally separate organizations for which the County is financially accountable. The
County is financially accountable for an organization if the County appoints a voting majority of the
organization's governing board and (1) the County is able to significantly influence the programs or services
performed or provided by the organization; or (2) the County is legally entitled to or can otherwise access the
organization's resources; the County is legally obligated or has otherwise assumed the responsibility to finance
the deficits of or provide financial support to, the organization; or the County is obligated for the debt of the
organization. Component units also include organizations that are fiscally dependent on the County in that the
County approves the budget, the issuance of debt, or the levying of taxes.
The component unit column in the financial statements identifies the financial data of the County’s discretely
presented component unit, MetroHealth System. It is reported separately to emphasize that it is legally
separate from the County.
MetroHealth System (the Hospital) – MetroHealth System is a legally separate, non-profit
organization, which provides health care and hospitalization to the general public and care for the
County’s indigents. The County appoints the majority of the Hospital’s Board of Trustees. The
Hospital’s annual operating budget is approved by the County. The Hospital is included in the
County’s reporting entity because of the significance of its operational and financial relationships with
the County. MetroHealth Systems operates on a year ending December 31. Furthermore, the
MetroHealth Foundation (the foundation) and the MHS Holdings LLC (LLC), which are component
units of the Hospital, are included in the Hospital’s financial statements. The Foundation is a not-forprofit organization supporting the Hospital that acts primarily as a fundraising organization to
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supplement the resources that are available to the Hospital in support of its programs. Although the
Hospital does not control the timing or the amount of receipts from the Foundation, the majority of
resources, or incomes thereon, which they hold and invest, are restricted to support the activities of the
Hospital. Separately issued financial statements can be obtained from the MetroHealth System, 2500
MetroHealth Drive, Cleveland, Ohio, 44109.
The County participates in the following jointly governed organizations and related organizations. These
organizations are presented in Notes 23 and 24 to the Basic Financial Statements and are excluded from the
accompanying financial statements.
Jointly Governed Organizations
Related Organizations
Northeast Ohio Areawide Coordinating Agency
North East Ohio Network
Gateway Economic Development Corporation
of Greater Cleveland
Western Reserve Area Agency on Aging
Cleveland-Cuyahoga County Port Authority
Northeast Ohio Regional Sewer District
Greater Cleveland Regional Transit Authority
Cuyahoga County Public Library
Cleveland Metropolitan Park District
Cuyahoga County Arts and Culture District
Cuyahoga County Land Bank
Cuyahoga Community College
As the custodian of public funds, the County Treasurer invests all public moneys held on deposit in the County
Treasury. In the case of the legally separate agencies, boards and commissions listed below, the County Fiscal
Officer serves as fiscal agent but the organizations are not considered a part of Cuyahoga County.
Accordingly the activity of the following districts is presented as agency funds within Cuyahoga County's
financial statements:
Cuyahoga County Health District
Cuyahoga County Soil and Water Conservation District
Information in the following notes to the basic financial statements is applicable to the primary government.
Information for the component unit is presented in Note 26.
Note 2 - Summary of Significant Accounting Policies
The financial statements of Cuyahoga County have been prepared in conformity with generally accepted
accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards
Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial
reporting principles. The more significant of the County's accounting policies are described below.
Basis of Presentation
The County’s basic financial statements consist of government-wide statements, including a statement of net
assets and a statement of activities, and fund financial statements, which provide a more detailed level of
financial information.
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Government-wide Financial Statements The statement of net assets and the statement of activities display
information about the County as a whole. These statements include the financial activities of the primary
government, except for fiduciary funds. The activity of the internal service funds is eliminated to avoid
“doubling up” revenues and expenses. The statements distinguish between those activities of the County that
are governmental and those that are considered business-type activities.
The statement of net assets presents the financial condition of the governmental and business-type activities of
the County at year-end. The statement of activities presents a comparison between direct expenses and
program revenues for each program or function of the County’s governmental activities and for the businesstype activities of the County. Direct expenses are those that are specifically associated with a service, program
or department and therefore clearly identifiable to a particular function. Program revenues include charges
paid by the recipient of the goods or services offered by the program, grants and contributions that are
restricted to meeting the operational or capital requirements of a particular program and interest earned on
grants that is required to be used to support a particular program. Revenues which are not classified as
program revenues are presented as general revenues of the County, with certain limited exceptions. The
comparison of direct expenses with program revenues identifies the extent to which each business segment or
governmental function is self-financing or draws from the general revenues of the County.
Fund Financial Statements During the year, the County segregates transactions related to certain County
functions or activities in separate funds in order to aid financial management and to demonstrate legal
compliance. Fund financial statements are designed to present financial information of the County at this
more detailed level. The focus of governmental and enterprise fund financial statements is on major funds.
Each major fund is presented in a separate column. Nonmajor funds are aggregated and presented in a single
column. The internal service funds are presented in a single column on the face of the proprietary fund
statements. Fiduciary funds are reported by type.
Fund Accounting
The County uses funds to maintain its financial records during the year. A fund is a fiscal and accounting
entity with a self-balancing set of accounts. There are three categories of funds: governmental, proprietary,
and fiduciary.
Governmental Fund Types Governmental funds are those through which most governmental functions are
financed. Governmental fund reporting focuses on the sources, uses and balances of current financial
resources. Expendable assets are assigned to the various governmental funds according to the purposes for
which they may or must be used. Current liabilities are assigned to the fund from which they will be paid.
The difference between governmental fund assets and liabilities is reported as fund balance. The following are
the County's major governmental funds:
General This fund accounts for and reports all financial resources except those required to be
accounted for and reported in another fund. The general fund balance is available to the County for
any purpose provided it is expended or transferred according to the charter of Cuyahoga County
and/or the general laws of Ohio.
Human Services This fund accounts for and reports property taxes from human services levies as well
as revenue from Federal, State and County governments restricted to provide entitlement services,
senior and adult programs, children and family services and employment services to eligible county
residents.
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Health and Human Services Levy This fund accounts for and reports restricted property taxes from
health and human services levies to provide public assistance to general relief recipients and certain
public social services
County Board of Developmental Disabilities This fund accounts for and reports State grants and
property taxes from the special developmental disability levy restricted for the developmentally
disabled.
Alcohol, Drug and Mental Health (ADAMH) Board This fund accounts for and reports a Countywide property tax levy as well as grants from Federal, State and County governments restricted for
various mental health programs and aid to individuals seeking alcohol and drug services through
effective oversight, coordination and planning activities.
Capital Projects This fund accounts for and reports debt proceeds and grants restricted for the
acquisition or construction of all County land and buildings, major improvements and road and bridge
improvements other than those financed by proprietary funds.
Global Center for Health Innovation (GCHI) This fund accounts for and reports debt proceeds
restricted for the construction of the GCHI facility.
The other governmental funds of the County account for grants and other resources whose use is restricted,
committed or assigned to a particular purpose.
Proprietary Funds Proprietary fund reporting focuses on the determination of operating income, changes in
net assets, financial position and cash flows. Proprietary funds are classified as either enterprise or internal
service.
Enterprise Funds Enterprise funds may be used to account for any activity for which a fee is charged
to external users for goods or services. The following is the County’s major enterprise fund:
Sanitary Engineer This fund is used to account for the maintenance operations of County
sewer lines. The office also enforces compliance of County sanitary regulations.
Internal Service Funds Internal service funds account for the financing of services provided by one
department or agency to other departments or agencies of the County on a cost-reimbursement basis.
The County’s internal service funds report on central custodial services, maintenance garage, data
processing, general printing reproduction and supplies, postage and on self-insurance programs for
employee medical benefits and workers’ compensation.
Fiduciary Fund Types Fiduciary fund reporting focuses on net assets and changes in net assets. The
fiduciary fund category is split into four classifications: pension trust funds, investment trust funds, privatepurpose trust funds and agency funds. Trust funds are used to account for assets held by the County under a
trust agreement for individuals, private organizations, or other governments and are therefore not available to
support the County’s own programs. Agency funds are custodial in nature (assets equal liabilities) and do not
involve measurement of results of operations.
The County’s fiduciary funds are agency funds. Agency funds are used to account for assets held by the
County as agent for the Board of Health and other districts and entities and for various taxes, assessments, and
State shared resources collected on behalf of and distributed to other local governments.
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Measurement Focus
Government-wide Financial Statements The government-wide financial statements are prepared using the
economic resources measurement focus. All assets and all liabilities associated with the operation of the
County are included on the Statement of Net Assets. The Statement of Activities presents increases (e.g.,
revenues) and decreases (e.g., expenses) in total net assets.
Fund Financial Statements All governmental funds are accounted for using a flow of current financial
resources measurement focus. With this measurement focus, only current assets and current liabilities,
generally, are included on the balance sheet. The statement of revenues, expenditures and changes in fund
balances reports on the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and
other financing uses) of current financial resources. This approach differs from the manner in which the
governmental activities of the government-wide financial statements are prepared. Governmental fund
financial statements therefore include a reconciliation with brief explanations to better identify the relationship
between the government-wide statements and the statements for governmental funds.
Like the government-wide statements, all proprietary funds are accounted for on a flow of economic resources
measurement focus. All assets and all liabilities associated with the operation of these funds are included on
the statement of fund net assets. The statement of changes in fund net assets presents increases (i.e., revenues)
and decreases (i.e., expenses) in net total assets. The statement of cash flows provides information about how
the County finances and meets the cash flow needs of its proprietary activities.
Basis of Accounting
Basis of accounting determines when transactions are recorded in the financial records and reported on the
financial statements. Government-wide financial statements are prepared using the accrual basis of accounting.
Governmental funds use the modified accrual basis of accounting. Proprietary and fiduciary funds also use the
accrual basis of accounting. Differences in the accrual and the modified accrual basis of accounting arise in
the recognition of revenue, the recording of deferred revenue, and in the presentation of expenses versus
expenditures.
Revenues - Exchange and Non-exchange Transactions Revenue resulting from exchange transactions, in
which each party gives and receives essentially equal value, is recorded on the accrual basis when the
exchange takes place. On a modified accrual basis, revenue is recorded in the year in which the resources are
measurable and become available. Available means that the resources will be collected within the current year
or are expected to be collected soon enough thereafter to be used to pay liabilities of the current year. For the
County, available means expected to be received within ninety days of year-end for all revenues except for
property taxes which have an available period of sixty days. Nonexchange transactions, in which the County
receives value without directly giving equal value in return, include sales taxes, property taxes, grants,
entitlements and donations. On an accrual basis, revenue from sales taxes is recognized in the period in which
the sale occurred. Revenue from property taxes is recognized in the year for which the taxes are levied (See
Note 8). Revenue from grants, entitlements and donations is recognized in the year in which all eligibility
requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year
when the resources are required to be used or the year when use is first permitted, matching requirements, in
which the County must provide local resources to be used for a specified purpose, and expenditure
requirements, in which the resources are provided to the County on a reimbursement basis. On a modified
accrual basis, revenue from nonexchange transactions must also be available before it can be recognized.
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Under the modified accrual basis, the following revenue sources are considered to be both measurable and
available at year-end: sales tax (see Note 9), interest, federal and state grants and subsidies, state-levied locally
shared taxes (including motor vehicle license fees and gasoline taxes), fees and rentals.
Deferred Revenue Deferred revenue arises when assets are recognized before revenue recognition criteria
have been satisfied. Property taxes for which there is an enforceable legal claim as of December 31, 2011, but
which were levied to finance year 2012 operations, have been recorded as deferred revenue. Grants and
entitlements received before the eligibility requirements are met are also recorded as deferred revenue. On
governmental fund financial statements, receivables that will not be collected within the available period have
also been reported as deferred revenue.
Unearned Revenues On proprietary fund financial statements, revenue received as of December 31, 2011, for
2012 services, has been recorded as unearned revenue.
Expenses/Expenditures On the accrual basis of accounting, expenses are recognized at the time they are
incurred. The measurement focus of governmental fund accounting is on decreases in net financial resources
(expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in which
the related fund liability is incurred, if measurable. Allocations of cost, such as depreciation and amortization,
are not recognized in governmental funds.
Cash and Cash Equivalents
To improve cash management, cash received by the County is pooled in a central bank account. Monies for all
funds are maintained in this account or are temporarily used to purchase short term investments. Individual
fund integrity is maintained through the County's records. Interest in the pool is presented as "Equity in
Pooled Cash and Cash Equivalents."
The County utilizes a financial institution to service bonded debt as principal and interest payments come due.
The balances in these accounts are presented on the statement of fund net assets as "Cash and Cash
Equivalents with Fiscal Agents."
Various departments within the County have segregated bank accounts for monies held separate from the
County's central bank account. These accounts are presented as "cash and cash equivalents in segregated
accounts" since they are not required to be deposited with the County Treasurer.
During 2011, investments were limited to the federal agriculture mortgage bonds, federal farm credit banks
bonds, federal home loan bank bonds, federal home loan mortgage corporation bonds, federal national
mortgage association bonds, delinquent tax anticipation notes, Garfield Heights notes, General Electric Capital
Corporation notes, State of Israel notes, Shaker Heights notes, money market accounts, mutual funds and
STAR Ohio.
Investments are reported at fair value which is based on quoted market prices, with the exception of
certificates of deposit, which are reported at cost.
STAR Ohio is an investment pool managed by the State Treasurer’s Office which allows governments within
the State to pool their funds for investment purposes. STAR Ohio is not registered with the SEC as an
investment company, but does operate in a manner consistent with Rule 2a7 of the Investment Company Act
of 1940. Investments in STAR Ohio are valued at STAR Ohio’s net asset value per share which is the price
the investment could be sold at December 31, 2011.
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Investment procedures are restricted by the provisions of the Ohio Revised Code. County policy requires
interest earned on investments to be credited to the general fund except where there is a legal requirement or
there are bond proceeds for capital improvements. Interest revenue credited to the GCHI capital projects fund
during 2011 amounted to $17,854,222 which includes $9,262,218 assigned from other County funds.
Investments with an original maturity of three months or less at the time of purchase and investments of the
cash management pool are presented on the financial statements as cash equivalents.
Prepaid Items
Payments made to vendors for services that will benefit periods beyond December 31, 2011, are recorded as
prepaid items using the consumption method by recording a current asset for the prepaid amount at the time of
purchase and reflecting the expenditure/expense in the year in which the services are consumed.
Inventory
Inventories are presented at cost on a first-in, first-out basis and are expended/expensed when used. Inventory
consists of expendable supplies held for consumption.
Restricted Assets
Assets are reported as restricted when limitations on their use change in nature or normal understanding of the
availability of the asset. Such constraints are either externally imposed by creditors, contributors, grantors, or
laws of other governments or imposed by law through constitutional provisions. Restricted assets in the
general fund represent money set aside for unclaimed monies. Restricted assets in the community
development special revenue fund and bond retirement debt service fund represent money set aside for bond
principal and interest payments. Restricted assets in the GCHI capital projects fund represent money set aside
for the construction of the Global Center for Health Innovation facility and for bond principal and interest
payments.
Capital Assets
General capital assets are capital assets which are associated with and generally arise from governmental
activities. They generally result from expenditures in the governmental funds. General capital assets are
reported in the governmental activities column of the government-wide statement of net assets but are not
reported in the fund financial statements. Capital assets utilized by the enterprise funds are reported both in
the business-type activities column of the government-wide statement of net assets and in the respective funds.
All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements
during the year. The County was able to estimate the historical cost for the initial reporting of infrastructure
by back-trending (i.e., estimating the current replacement cost of the infrastructure to be capitalized and using
an appropriate price-level index to deflate the cost to the acquisition year or estimated acquisition year).
Donated capital assets are recorded at their fair market values as of the date received. The County maintains a
capitalization threshold of nine thousand with the exception of land as land is listed regardless of cost.
Improvements are capitalized; the costs of normal maintenance and repairs that do not add to the value of the
asset or materially extend an asset’s life are not. Interest incurred during the construction of proprietary fund
capital assets is also capitalized.
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All capital assets are depreciated except for land and construction in progress. Improvements are depreciated
over the remaining useful lives of the related capital assets. Depreciation is computed using the straight-line
method over the following useful lives:
Description
Land Improvements
Utility Plant
Buildings, Structures and Improvements
Vehicles
Infrastructure
Governmental
Activities
Estimated Lives
Business Type
Activities
Estimated Lives
5 - 20 Years
N/A
5 - 40 Years
3 - 22 Years
4 - 9 Years
20 - 69 Years
5 - 20 Years
20 - 50 Years
5 - 40 Years
3 - 22 Years
4 - 9 Years
N/A
Vacation, compensatory time and exchange time benefits are accrued as a liability as the benefits are earned if
the employees' rights to receive compensation are attributable to services already rendered and it is probable
that the County will compensate the employees for the benefits through paid time off or some other means.
The County records a liability for all accumulated unused vacation, compensatory and exchange time when
earned for all employees.
Sick leave benefits are accrued as a liability using the termination method. An accrual for earned sick leave is
made to the extent that it is probable that benefits will result in termination payments. The liability is an
estimate based on the County's past experience of making termination payments.
Bond Premiums
On the government-wide financial statements, bond premiums are deferred and amortized over the term of the
bonds using the straight line method. The straight-line method of amortization is not materially different from
the effective-interest method. Bond premiums are presented as an increase of the face amount of the general
obligation bonds payable. On governmental fund financial statements, bond premiums are receipted in the
year the bonds are issued.
Issuance Costs
Issuance costs for underwriting fees and bond and note insurance for various debt issues are being amortized
using the straight-line method over the life of the issuance on the government-wide statements and in the
County’s enterprise funds. The straight-line method of amortization is not materially different from the
effective-interest method. On the governmental fund statements, issuance costs are expended in the year the
bonds and notes are issued. Issuance costs are generally paid from bond and note proceeds.
As permitted by State statute, the County paid bond issuance costs from the bond proceeds and therefore does
not consider that portion of the debt to be capital-related debt. That portion of the debt was offset against the
unamortized bond issuance costs which were included in the determination of unrestricted net assets.
Reporting both within the same element of net assets prevents one classification from being overstated while
another is understated by the same amount.
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Accrued Liabilities and Long-Term Obligations
All payables, accrued liabilities and long-term obligations are reported in the government-wide financial
statements, and all payables, accrued liabilities and long-term obligations payable from proprietary funds are
reported in the proprietary fund financial statements.
In general, governmental fund payables and accrued liabilities that, once incurred, are paid in a timely manner
and in full from current financial resources are reported as obligations of the funds. However, claims and
judgments and compensated absences that will be paid from governmental funds are reported as a liability in
the fund financial statements only to the extent that they are due for payment during the current year. Bonds,
capital leases and long-term loans are recognized as a liability in the fund financial statements when due.
Fund Balance
Fund balance is divided into five classifications based primarily on the extent to which the County is bound to
observe constraints imposed upon the use of the resources in the governmental funds. The classifications are
as follows:
Nonspendable The nonspendable fund balance category includes amounts that cannot be spent because
they are not in spendable form, or legally or contractually required to be maintained intact. The “not in
spendable form” criterion includes items that are not expected to be converted to cash. It also includes the
long-term amount of loans receivable, as well as property acquired for resale, unless the use of the
proceeds from the collection of those receivables or from the sale of those properties is restricted,
committed, or assigned.
Restricted Fund balance is reported as restricted when constraints placed on the use of resources are either
externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or
regulations of other governments or is imposed by law through constitutional provisions.
Committed The committed fund balance classification includes amounts that can be used only for the
specific purposes imposed by a formal action (resolution) of County Council. Those committed amounts
cannot be used for any other purpose unless County Council removes or changes the specified use by
taking the same type of action (resolution) it employed to previously commit those amounts. Committed
fund balance also incorporates contractual obligations to the extent that existing resources in the fund have
been specifically committed for use in satisfying those contractual requirements.
Assigned Amounts in the assigned fund balance classification are intended to be used by the County for
specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental
funds other than the general fund, assigned fund balance represents the remaining amount that is not
restricted or committed. These amounts are assigned by the County Council. In the general fund,
assigned amounts represent intended uses established by County Council or a County official delegated
that authority by County Charter or ordinance, or by State Statute. State statute authorizes the County
Fiscal Officer to assign fund balance for purchases on order provided amounts have been lawfully
appropriated.
Unassigned Unassigned fund balance is the residual classification for the general fund and includes all
spendable amounts not contained in the other classifications. In other governmental funds, the unassigned
classification is used only to report a deficit balance.
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The County applies restricted resources first when expenditures are incurred for purposes for which either
restricted or unrestricted (committed, assigned, and unassigned) amounts are available. Similarly, within
unrestricted fund balance, committed amounts are reduced first followed by assigned, and then unassigned
amounts when expenditures are incurred for purposes for which amounts in any of the unrestricted fund
balance classifications could be used.
Interfund Balances
On the fund financial statements, outstanding interfund loans and unpaid amounts for interfund services are
reported as “interfund receivables/payables”. Interfund balance amounts are eliminated in the statement of net
assets, except for any net residual amounts due between governmental and business-type activities, which are
presented as internal balances.
Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results may differ from those estimates.
Internal Activity
Transfers between governmental and business-type activities on the government-wide statements are reported
in the same manner as general revenues. Transfers between governmental activities are eliminated on the
government wide financial statements. Internal events that are allocations of overhead expenses from one
function to another or within the same function are eliminated on the Statement of Activities. Interfund
payments for services provided and used are not eliminated.
Internal allocations of overhead expenses from one function to another or within the same function are
eliminated on the statement of activities. Payments for interfund services provided and used are not
eliminated.
Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses
in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment
are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in
governmental funds and after non-operating revenues/expenses in proprietary funds. Repayments from funds
responsible for particular expenditures/expenses to the funds that initially paid for them are not presented on
the financial statements.
Budgetary Process
All funds, except agency funds are legally required to be budgeted and appropriated. The Alcohol, Drug and
Mental Health Board special revenue is budgeted on a fiscal year ended June 30, 2011. The major documents
prepared are the tax budget, the certificate of estimated resources, and the appropriations resolution, all of
which are prepared on the budgetary basis of accounting. The tax budget demonstrates a need for existing or
increased tax rates. The certificate of estimated resources establishes a limit on the amount the County may
appropriate. The appropriations resolution is Council’s authorization to spend resources and sets annual limits
on expenditures plus encumbrances at the level of control selected by Council. The legal level of control is at
the personnel, capital purchases and other object level within a department and fund. Any budgetary
modifications at this level may only be made by resolution of County Council.
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The certificate of estimated resources may be amended during the year if projected increases or decreases in
revenue are identified by the Fiscal Officer. The amounts reported as the original and final budgeted amounts
on the budgetary statements reflect the amounts on the original and final amended certificate of estimated
resources in place when original and final appropriations were passed by Council.
The appropriation resolution is subject to amendment throughout the year with the restriction that
appropriations cannot exceed estimated resources. The amounts reported as the original budgeted amounts
reflect the first appropriation resolution for that fund that covered the entire year, including amounts
automatically carried forward from prior years. The amounts reported as the final budgeted amounts represent
the final appropriation amounts passed by Council during the year.
Net Assets
Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of
related debt consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of
any borrowing used for the acquisition, construction or improvement of those assets. Net assets are reported
as restricted when there are limitations imposed on their use through external restrictions imposed by creditors,
grantors or laws or regulations of other governments. Net assets restricted for other purposes include the
judicial services, legislative and executive operations, County Bureau of Support and Care and custody of
delinquent juveniles.
The County applies restricted resources when an expense is incurred for purposes for which both restricted and
unrestricted net assets are available.
Operating Revenues and Expenses
Operating revenues are those revenues that are generated directly from the primary activity of the proprietary
funds. For the County, these revenues are charges for services for the sanitary engineer, the County airport,
the County parking garage, the County information systems, central custodial services, the maintenance
garage, data processing, printing, reproduction and supplies, postage, workers’ compensation and health
insurance. Operating expenses are necessary costs that have been incurred in order to provide the good or
service that is the primary activity of the fund. Any revenues and expenses not meeting the definitions of
operating are reported as non-operating.
Contributions of Capital
Contributions of capital in proprietary fund financial statements arise from contributions of capital assets from
the capital projects governmental fund and from outside contributions of resources restricted to capital
acquisition and construction.
Note 3 - Changes in Accounting Principles and Restatements
Changes in Accounting Principles
For 2011, the County has implemented Governmental Accounting Standard Board (GASB) Statement No. 54,
“Fund Balance Reporting and Governmental Fund Type Definitions”, Statement No. 59 “Financial Instrument
Omnibus” and Statement No. 62 “Codification of Accounting and Financial Reporting Guidance Contained in
Pre-November 30, 1989 FASB and AICPA Pronouncements”.
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GASB Statement No. 54 enhances the usefulness of fund balance information by providing clearer fund
balance classifications that can be more consistently applied and by clarifying the existing governmental fund
type definitions. This statement establishes fund balance classifications that comprise a hierarchy based
primarily on the extent to which a government is bound to observe constraints imposed upon the use of the
resources reported in governmental funds. The implementation of this statement resulted in the
reclassification of certain funds and restatement of the County’s financial statements.
GASB Statement No. 59 addresses significant practice issues that have arisen when accounting for financial
instruments by updating and improving existing standards regarding financial reporting of certain financial
instruments and external investment pools. The implementation of this statement did not result in any change
in the County’s financial statements.
GASB Statement No. 62 incorporates into GASB’s authoritative literature certain FASB and AICPA
pronouncements issued on or before November 30, 1989. The implementation of this statement did not result
in any change in the County’s financial statements.
Restatement
The implementation of GASB Statement No. 54 had the following effect on fund balances of the major and
nonmajor funds as they were previously reported.
Health and
Human
Services Levy
County Board
of Developmental
Disabilities
Alcohol, Drug
and Mental
Health Board
General
Human
Services
Fund Balance at
December 31, 2010
Change in Fund Structure
$206,791,182
(4,044,912)
($10,498,589)
29,567,021
$83,800,307
(52,077,208)
$120,743,848
0
$6,812,809
0
Adjusted Fund Balance at
December 31, 2010
$202,746,270
$19,068,432
$31,723,099
$120,743,848
$6,812,809
Global Center
for Health
Innovation
Other
Governmental
Funds
Total
Governmental
Funds
Fund Balance at
December 31, 2010
($67,681,877) $410,802,638
(1,025,873)
0
$177,147,250
36,816,188
$927,917,568
9,235,216
Adjusted Fund Balance at
December 31, 2010
($68,707,750) $410,802,638
$213,963,438
$937,152,784
Capital
Projects
The implementation of GASB Statement No. 54 adjusted net assets of governmental funds at December 31,
2010, as they were previously reported, by ($19,422,576) from $878,671,406 to $859,248,830.
The implementation of GASB Statement No. 54 had the following effect on net assets of the major and
nonmajor enterprise funds and internal service funds as they were previously reported.
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Sanitary
Engineer
Other
Enterprise
Funds
Total
Business-Type
Activities
Internal
Service
$70,372,639
1,393,833
$21,849,491
0
$92,222,130
1,393,833
$59,305,384
13,377
Adjusted Net Assets, December 31, 2010
$71,766,472
Internal Balance
Total Adjusted Net Assets, December 31, 2010
$21,849,491
93,615,963
1,046,000
$94,661,963
$59,318,761
Net Assets, December 31, 2010
Note 4 - Fund Balances
Fund balance is classified as nonspendable, restricted, committed, assigned and/or unassigned based primarily
on the extent to which the County is bound to observe constraints imposed upon the use of the resources in the
government funds. The constraints placed on fund balance for the major governmental funds and all other
governmental funds are presented below:
Fund Balances
Nonspendable
Unclaimed Monies
Loans Receivable
Total Nonspendable
Restricted for
Real Estate Assessment
Children Services
Judicial
Solid Waste
Health and Safety
Social Services
Public Works
Other Purposes
Debt Service
Capital Projects
Total Restricted
Assigned to
Coroner's Lab
Purchases on Order
Total Assigned
Health and
Human
Services
Levy
Human
Services
General
County Board of
Developmental
Disabilities
$7,924,464
1,000,000
8,924,464
$0
0
0
$0
0
0
$0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
44,426,156
0
0
0
0
0
0
0
0
0
0
0
44,426,156
123,845,982
0
0
0
0
0
0
0
0
0
0
0
0
123,845,982
334,647
6,595,031
6,929,678
0
0
0
0
0
0
0
0
0
215,689,432
(8,592,146)
0
0
$231,543,574
($8,592,146)
$44,426,156
$123,845,982
- 45 -
Fund Balances
Nonspendable
Unclaimed Monies
Loans Receivable
Total Nonspendable
Restricted for
Real Estate Assessment
Children Services
Judicial
Solid Waste
Health and Safety
Social Services
Public Works
Other Purposes
Debt Service
Capital Projects
Total Restricted
Alcohol, Drug
and Mental
Health Board
Other
Governmental
Funds
Total
$0
0
0
$0
0
0
$0
0
0
$0
0
0
$7,924,464
1,000,000
8,924,464
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
399,901,269
399,901,269
0
0
65,876,906
15,799,554
33,113,786
16,096,428
3,006,690
9,063,380
4,384,842
46,584,237
8,861,647
21,830,269
0
224,617,739
123,845,982
44,426,156
65,876,906
15,799,554
33,113,786
16,096,428
3,006,690
9,063,380
4,384,842
46,584,237
8,861,647
21,830,269
399,901,269
792,791,146
0
0
0
0
0
0
0
0
0
0
0
0
334,647
6,595,031
6,929,678
(2,107,065)
(74,146,907)
0
(2,379,188)
128,464,126
($2,107,065)
($74,146,907)
$399,901,269
$222,238,551
$937,109,414
Assigned to
Coroner's Lab
Purchases on Order
Total Assigned
Global Center
for Health
Innovation
Capital
Projects
Note 5 – Accountability and Compliance
Accountability
The following funds had deficit fund balances as of December 31, 2011:
Special Revenue Funds
Human Services
Support Enforcement
Victim Assistance
Litter
$8,592,146
2,107,065
1,746,255
77,343
43,457
Capital Projects Funds
Capital Projects
Road Capital Projects
$74,146,907
512,133
The special revenue and the capital projects funds have deficits caused by the recognition of expenditures on a
modified accrual basis of accounting which are substantially greater than the expenditures recognized on a
cash basis. The general fund is liable for any deficit in the funds and provides transfers when cash is required,
not when accruals occur.
- 46 -
Compliance
The County had negative cash fund balances in the community development fund, workforce investment fund,
capital projects fund, County parking garage enterprise fund and the central custodial service internal service
fund of $1,753,038, $603,863, $70,693,739, $306,904, and $1,469,745; respectively, indicating that revenue
from other sources were used to pay obligations of these funds contrary to Ohio Revised Code Section
5705.10(H).
Ohio Rev. Code § 5705.39 states that the total appropriations from each fund shall not exceed the total of the
estimated revenue available for expenditure therefrom, as certified by the budget commission, or in case of
appeal, by the board of tax appeals. No appropriation measure shall become effective until the county auditor
files with the appropriating authority a certificate that the total appropriations from each fund, taken together
with all other outstanding appropriations, do not exceed such official estimate or amended official estimate.
When the appropriation does not exceed such official estimate, the county auditor shall give such certificate
forthwith upon receiving from the appropriating authority a certified copy of the appropriation measure.
Appropriations shall be made from each fund only for the purposes for which such fund is established.
The County filed their original permanent appropriations on January 15, 2011. However, the County Fiscal
Officer did not issue a “do not exceed” certificate due to the following funds having appropriations in excess
of total estimated resources:
Fund
Original Estimated
Resources Plus
Carryover Balances
Human Services
Workforce Investment Act Operating
Capital Projects
County Parking Garage
Data Processing
Printing and Reproductions
$225,888,617
(8,432,187)
14,477,325
(62,236,030)
3,114,222
17,475,386
3,672,339
Appropriations
$240,917,048
3,034,357
23,518,112
0
4,295,305
19,029,898
4,957,040
Variance
($15,028,431)
(11,466,544)
(9,040,787)
(62,236,030)
(1,181,083)
(1,554,512)
(1,284,701)
These weaknesses may result in the County spending more than their available resources. Management has
indicated that cash balances and appropriations will be closely monitored to ensure no future violations occur.
Note 6 - Budgetary Basis of Accounting
While the County’s reporting financial position, results of operations and changes in fund balance on the basis
of generally accepted accounting principles (GAAP), the budgetary basis as provided by law is based upon
accounting for certain transactions on a basis of cash receipts, disbursements and encumbrances. The
Statements of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual are presented in the
basic financial statements for the general fund and major special revenue funds. The major differences
between the budget basis and the GAAP basis are:
1.
Revenues are recorded when received in cash (budget) as opposed to when susceptible to
accrual (GAAP).
- 47 -
2.
Expenditures are recorded when paid in cash (budget) as opposed to when the liability is
incurred (GAAP).
3.
Encumbrances are treated as expenditures for all funds (budget) rather than restricted,
committed, or assigned fund balance (GAAP).
4.
Unrecorded cash represents amounts received but not reported by the County on the
operating statements (budget), but which is reported on the GAAP basis operating
statements.
5.
Investments are reported at cost (budget) rather than at fair value (GAAP).
6.
Budgetary revenues and expenditures for the ADAMH Board grants are classified to the
ADAMH Board special revenue fund for GAAP reporting.
7.
Timing differences in the ADAMH Board special revenue fund resulted from the ADAMH
Board adopting a budget covering a fiscal year end (Budget) rather than a calendar year end
(GAAP).
The following table summarizes the adjustments necessary to reconcile the GAAP basis statements to the
budgetary basis statements for the general and major special revenue funds:
GAAP Basis
Net Adjustment for
Revenue Accruals
Beginning Fair Value
Adjustment for Investments
Ending Fair Value
Adjustment for Investments
Ending Unrecorded Cash
Timing Difference
Perspective Difference:
ADAMH Board Grant Fund
Net Adjustment for
Expenditure Accruals
Encumbrances
Budget Basis
General
Human
Services
Health and
Human
Services Levy
County Board
of Developmental
Disabilities
Alcohol, Drug
and Mental
Health Board
$28,797,304
($27,660,578)
$12,703,057
$3,102,134
($8,919,874)
1,020,024
12,278,579
0
1,431,290
11,418,242
1,869,988
0
0
0
1,041,943
(142,609)
0
0
0
0
0
0
0
0
0
0
0
0
(243,704)
0
0
0
13,078
0
(2,486,211)
(8,313,252)
$22,198,453
(96,315)
(584,117)
(35,424,247)
397,923
(7,011,198)
5,221
(7,173,125)
(2,577,713)
0
($52,250,700)
$5,993,467
($3,045,746)
$550,366
Note 7 - Deposits and Investments
Monies held by the County are classified by State Statute two categories, active and inactive. Active monies
are public monies determined to be necessary to meet current demands upon the County treasury. Active
- 48 -
monies must be maintained either as cash in the County treasury, in commercial accounts payable or
withdrawable on demand, including negotiable order of withdrawal (NOW) accounts, or in money market
deposit accounts.
Protection of the County’s deposits is provided by the Federal Deposit Insurance Corporation, by eligible
securities pledged by the financial institution as security for repayment, by surety company bonds deposited
with the treasurer by the financial institution or by a single collateral pool established by the financial
institution to secure the repayment of all public monies deposited with the institution.
Monies held by the County, which are not considered active, are classified as inactive. Inactive monies may
be deposited or invested in the following securities provided a written investment policy has been filed with
the Ohio Auditor of State:
1.
United States Treasury Bills, Notes, Bonds, or any other obligation or security issued by the
United States Treasury or any other obligation guaranteed as to principal and interest by the
United States; or any book entry, zero-coupon United States treasury security that is a direct
obligation of the United States;
2.
Bonds, notes, debentures, or any other obligations or securities issued by any federal government
agency or instrumentality, including but not limited to, Federal National Mortgage Association,
Federal Home Loan Bank, Federal Farm Credit Bank, Federal Home Loan Mortgage
Corporation, Government National Mortgage Association, and Student Loan Marketing
Association. All federal agency securities shall be direct issuances of federal government
agencies or instrumentalities;
3.
Written repurchase agreements in securities listed above provided that the market value of the
securities subject to the repurchase agreement must exceed the principal value of the agreement
by at least two percent and be marked to market daily, and that the term of the agreement must
not exceed thirty days;
4.
Bonds and other obligations of the State of Ohio or its political subdivisions, provided that such
political subdivisions are located wholly or partly within the County;
5.
Time certificates of deposit or savings or deposit accounts, including, but not limited to, passbook
accounts;
6.
No-load money market mutual funds consisting exclusively of obligations described in (1) or (2)
above and repurchase agreements secured by such obligations, provided that these investments
are made only through eligible institutions;
7.
The State Treasurer's investment pool (STAR Ohio);
8.
Securities lending agreements in which the County lends securities and the eligible institution
agrees to simultaneously exchange similar securities or cash, equal value for equal value;
9.
Up to twenty-five percent of the County’s average portfolio in either of the following:
a.
Commercial paper notes in entities incorporated under the laws of Ohio, or any other State, that
have assets exceeding five hundred million dollars, which are rated in the highest classification
- 49 -
established by two nationally recognized standard rating services, which do not exceed ten
percent of the value of the outstanding commercial paper of the issuing corporation and which
mature within 270 days after purchase;
b.
Banker’s acceptances eligible for purchase by the Federal Reserve System and which mature
within 180 days after purchase;
10.
Fifteen percent of the County’s average portfolio in notes issued by U.S. corporations or by
depository institutions that are doing business under authority granted by the U.S. provided that
the notes are rated in the second highest or higher category by at least two nationally recognized
standard rating services at the time of purchase and the notes mature within two years from the
date of purchase;
11.
No-load money market mutual fund rated in the highest category at the time of purchase by at
least one nationally recognized standard rating service consisting exclusively of obligations
guaranteed by the United States, securities issued by a federal government agency of
instrumentality, and/or highly rate commercial paper;
12.
One percent of the County’s average portfolio in debt interest rated at the time of purchase in the
three categories by two nationally recognized standard rating services and issued by foreign
nations diplomatically recognized by the United States government.
Reverse repurchase agreements, investments in derivatives, and investments in stripped principal or interest
obligations that are not issued or guaranteed by the United States are prohibited. The issuance of taxable notes
for the purpose of arbitrage, the use of leverage and short selling are also prohibited. Other than corporate
notes, commercial paper, and bankers acceptances, an investment must mature within five years from the date
of settlement unless matched to a specific obligation or debt of the County. Investments must be purchased
with the expectation that they will be held to maturity. Investments may only be made through specified
dealers and institutions. Payments for investments may be made only upon delivery of the securities
representing the investments to the treasurer or qualified trustee or, if the securities are not represented by a
certificate, upon receipt of confirmation of transfer from the custodian.
Deposits
Custodial credit risk for deposits is the risk that in the event of bank failure, the County will not be able to
recover deposits or collateral securities that are in the possession of an outside party. At year-end,
$310,573,867 of the County’s bank balance of $430,256,264 was uninsured and uncollateralized. Although
the securities were held by the pledging financial institutions' trust department in the County's name and all
State statutory requirements for the deposit of money had been followed, non-compliance with federal
requirements could potentially subject the County to a successful claim by the FDIC.
The County has no deposit policy for custodial risk beyond the requirements of State statute. Ohio law
requires that deposits be either insured or be protected by eligible securities pledged to and deposited either
with the County or a qualified trustee by the financial institution as security for repayment, or by a collateral
pool of eligible securities deposited with a qualified trustee and pledged to secure the repayment of all public
monies deposited in the financial institution whose market value at all times shall be at least one hundred five
percent of the deposits being secured.
- 50 -
Investments
Investments are reported at fair value. As of December 31, 2011, the County had the following investments:
Fair Value
Federal Agriculture Mortgage Bonds
Federal Farm Credit Bank Bonds
Federeal Home Loan Bank Bonds
Federeal Home Loan Mortgage
Corporation Bank Bonds
Federal National Mortgage Association Bonds
Delinquent Tax Anticipation Notes
City of Garfield Heights Notes
General Electric Corporation Notes
State of Israel Notes
City of Shaker Heights Notes
Money Market Accounts
Mutual Funds
STAR Ohio
Total Portfolio
Maturity
Moody
Rating
Percent of
Total
Investments
$10,657,140
92,385,150
82,256,000
More than Two Years
More than Two Years
More than One Year
Aaa
Aaa
Aaa
N/A
17.62%
15.69%
172,664,650
136,288,900
520,000
2,021,000
5,376,950
5,000,000
250,000
4,578,581
8,332,613
3,887,225
More than One Year
More than Two Years
Less than One Year
More than Two Years
Less than One Year
More than Two Years
Less than One Year
Less than One Year
More than One Year
Average 57 Days
Aaa
Aaa
N/A
Baa1
Aa3
A1
Baa1
A3
A3
N/A
32.94%
26.00%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$524,218,209
Interest Rate Risk As a means of limiting its exposure to fair value losses caused by rising interest rates, the
County’s investment policy requires that operating funds be invested primarily in short-term investments
maturing within five years from the date of purchase and that the County’s investment portfolio be structured
so that securities mature to meet cash requirements for ongoing operations and/or long-term debt payments.
The stated intent of the policy is to avoid the need to sell securities prior to maturity. The purchase of any
security with a maturity of greater than 5 years must be approved in advance by the Investment Advisory
Committee.
Credit Risk The Moody’s ratings of the County’s investments are listed in the table above. STAR Ohio
carries a rating of AAAm by Standard and Poor’s. Ohio law requires that STAR Ohio maintain the highest
rating provided by at least one nationally recognized standard rating service. The County has no investment
policy that addresses credit risk.
Concentration of Credit Risk The County’s policy specifies that the portfolio be structured to diversify
investments to reduce the risk of loss resulting from over-concentration of assets in a specific maturity, a
specific issuer or a specific type of investment. Each investment type is limited to a maximum percentage of
the total average portfolio.
Foreign Currency Risk Foreign Currency Risk is the risk that changes in exchange rates will adversely affect
the fair value of an investment or a deposit. The County’s investment policy states foreign notes must be rated
at the time of purchase in one of the three highest categories by two nationally recognized standard rating
services. All interest and principal shall be denominated and payable in United States dollars. The notes must
be backed by the full faith and credit of the foreign nation and there can be no prior history of default. The
maturity of foreign notes cannot exceed five years from purchase and in total, they cannot exceed one percent
of the County’s total average portfolio. The County’s exposure to foreign currency risk is as follows:
- 51 -
Investment
State of Israel Notes
Currency
Israeli New Sheqel
Maturity
Fair Value
(in US dollars)
4/1/2014
$5,000,000
Note 8 - Property Taxes
Property taxes include amounts levied against all real and public utility property located in the County.
Property tax revenue received during 2011 for real and public utility property taxes represents collections of
2010 taxes.
2011 real property taxes are levied after October 1, 2011, on the assessed value as of January 1, 2011, the lien
date. Assessed values are established by State law at 35 percent of appraised market value. 2011 real property
taxes are collected in and intended to finance 2012.
Real property taxes are payable annually or semi-annually. If paid annually, payment is due December 31; if
paid semi-annually, the first payment is due December 31, with the remainder payable by June 20. Under
certain circumstances, State statutes permits later payment dates to be established.
Public utility tangible personal property currently is assessed at varying percentages of true value; public
utility real property is assessed at 35 percent of true value. 2011 public utility property taxes which became a
lien December 31, 2010, are levied after October 1, 2011, and are collected in 2012 with real property taxes.
The full tax rate for all County operations for the year ended December 31, 2011, was $13.32 per $1,000 of
assessed value. The assessed values of real and public utility tangible property upon which 2011 property tax
receipts were based are as follows:
Real Property
Public Utility Personal Property
$29,153,170,350
673,170,690
Total Assessed Value
$29,826,341,040
The County Fiscal Officer collects property tax on behalf of all taxing districts in the County. The County
Fiscal Officer periodically remits to the taxing districts their portions of the taxes collected. Collections of the
taxes and remittance of them to the districts are accounted for in various agency funds of the County. Property
taxes receivable represents real and tangible personal property taxes, public utility taxes and outstanding
delinquencies which are measurable as of December 31, 2011, and for which there is an enforceable legal
claim. In the governmental funds, the entire receivable has been offset by deferred revenue since the current
taxes were not levied to finance 2011 operations and the collection of delinquent taxes during the available
period is not subject to reasonable estimation. On a full accrual basis, collectible delinquent property taxes
have been recorded as revenue while the remainder of the receivable is deferred.
Note 9 - Permissive Sales and Use Tax
In 1969, the County Commissioners by resolution imposed a one-half percent tax on all retail sales made in the
County and on the storage, use, or consumption in the County of tangible personal property, including
automobiles, not subject to the sales tax for a continuing period of time. In 1987, the County Commissioners
by resolution imposed an additional one-half percent tax for a continuing period of time. In 2007, the County
Commissioners by resolution imposed an additional one-quarter percent tax for twenty years.
- 52 -
Vendor collections of the tax are paid to the State Treasurer by the twenty-third day of the month following
collection. The State Tax Commissioner certifies to the State Auditor the amount of the tax to be returned to
the County. The State Tax Commissioner's certification must be made within forty-five days after the end of
the month. The Office of Budget and Management then has five days in which to draw a warrant payable to
the County.
Proceeds of the tax are credited to the general fund. A receivable is recognized at year-end for amounts that
will be received from sales which occurred during the prior year.
Note 10 - Receivables
Receivables at December 31, 2011 consisted of taxes, accounts (billings for user charged services, including
unbilled utility services), special assessments, accrued interest, loans (community development block grant
monies loaned to local businesses), interfund, sales tax, and intergovernmental receivables arising from grants
and entitlements. All receivables are considered fully collectible, including accounts receivable which, if
delinquent may be certified and collected as a special assessment, subject to foreclosure for nonpayment. All
receivables except for loans, special assessments and delinquent property taxes are expected to be collected
within one year.
The loans receivable at December 31, 2011, reported in other governmental funds, represent revolving loans
made to private enterprises under the United States Department of Housing and Urban Development
Community Development Block Grant Program, Section 17 and Home Affordability Act programs. The notes
are due on various dates with a large portion not due until the related property is sold or the debtor becomes
deceased. Generally the loans are collateralized by the property that is improved with the proceeds of the
notes; however, the County’s security interest is usually subordinate to that of another creditor. Many notes
are non-interest bearing while other notes bear interest at various rates. Loans expected to be collected in
more than one year amount to $46,782,346 in the community development special revenue fund. At
December 31, 2011 there were no delinquent loans.
The County entered into a project funding agreement with MMPI Cleveland Development LLC (Developer) to
provide funds, through a loan from the County, for the planning, designing, financing and constructing the
Global Center for Health Innovation facility. As of December 31, 2011, the Developer has drawn down
$122,066,783 of the available funds. During 2011, the Developer repaid $18,233,215 leaving an outstanding
balance of $103,833,568. Loans expected to be collected in more than one year amount to $84,822,805 in the
GCHI capital projects fund. At December 31, 2011 there were no delinquent loans. See Note 19 for
additional information.
Special assessments expected to be collected in more than one year amount to $9,325,145 in the sanitary
engineer enterprise fund.
Property taxes, although ultimately collectible, include some portion of delinquencies that will not be collected
within one year.
- 53 -
A summary of the principal items of intergovernmental receivables follows:
General Fund
Local Government and Revenue Assistance
Miscellaneous
Property Tax Rollbacks and Exemptions
Visiting Municipal Judges
Amount
$14,796,080
2,073,099
955,095
11,203
Total General Fund
17,835,477
Special Revenue Funds
Human Services
Motor Vehicle Gas Tax
Children Sevices
Support Enforcement
Other Community Development
Treatment Alternative for Safer Community
Judicial
Health and Safety
Social Services
16,767,189
3,946,649
10,618,341
7,231,474
9,307,542
13,075,610
228,991
6,173,780
13,374
185,621
1,500,011
1,115,371
657,691
Total Special Revenue Funds
70,821,644
Debt Service Fund
Debt Service
1,903,086
Capital Projects Funds
Capital Projects
3,122,120
$93,682,327
Enterprise Fund
Cuyahoga County Information Systems
$78,603
Internal Service Funds
Central Custodial Services
Data Processing
$1,222,766
22,481
Total Internal Service Funds
$1,245,247
Receivables and payables are recorded to the extent that the amounts are determined to be material and
substantiated not only by supporting documentation, but also by a reasonable, systematic method of
determining their existence, completeness, valuation, and in the case of receivables, collectability.
Using this criteria, the County has elected not to record child support arrearages within the special revenue and
agency fund types. These amounts, while potentially significant, are not considered measurable, and because
collections are often significantly in arrears, the County is unable to determine a reasonable value.
- 54 -
Note 11 - Capital Assets
Capital asset activity for the year ended December 31, 2011, was as follows:
Balance
12/31/10
Additions
Reductions
Balance
12/31/11
Government Activities:
Land
$93,222,259
253,496,358
$0
191,609,323
$0
(41,813,719)
$93,222,259
403,291,962
Total Nondepreciable Capital Assets
346,718,617
191,609,323
(41,813,719)
496,514,221
Depreciable Capital Assets
Land Improvements
Vehicles
Infrastructure
11,751,000
613,404,437
57,436,000
12,293,000
187,413,000
0
13,796,003
1,374,467
1,538,794
35,221,832
0
(3,528,962)
(418,966)
0
0
11,751,000
623,671,478
58,391,501
13,831,794
222,634,832
Total Depreciable Capital Assets
882,297,437
51,931,096
(3,947,928)
930,280,605
Less Accumulated Depreciation
Land Improvements
Vehicles
Infrastructure
(4,234,000)
(342,192,000)
(37,463,000)
(9,445,000)
(85,931,000)
(552,323)
(18,803,965)
(4,754,723)
(1,227,701)
(6,084,872)
0
1,694,595
361,580
0
0
(4,786,323)
(359,301,370)
(41,856,143)
(10,672,701)
(92,015,872)
Total Accumulated Depreciation
(479,265,000)
(31,423,584)
2,056,175
(508,632,409)
403,032,437
20,507,512
(1,891,753)
421,648,196
$749,751,054
$212,116,835
($43,705,472)
$918,162,417
Total Depreciable Capital Assets, Net
Governmental Activities Capital Assets, Net
Depreciation expense was charged to governmental activities as follows:
General Government:
Judicial
Health and Safety
Public Works
Social Services
Development
Total
$5,296,370
7,827,534
4,765,291
7,388,780
6,144,337
1,272
$31,423,584
- 55 -
Balance
12/31/10
Business Type Activities:
Land
Additions
Balance
12/31/11
Reductions
$12,265,954
6,734,609
$0
0
$0
(6,614,731)
$12,265,954
119,878
19,000,563
0
(6,614,731)
12,385,832
Land Improvements
Utility Plant
Vehicles
11,077,609
58,926,319
22,413,276
1,720,995
7,335,264
552,458
6,062,273
126,580
18,893
142,170
0
0
0
0
0
11,630,067
64,988,592
22,539,856
1,739,888
7,477,434
101,473,463
6,902,374
0
108,375,837
Land Improvements
Utility Plant
Vehicles
(9,750,290)
(32,878,783)
(12,403,022)
(1,239,580)
(5,265,397)
(256,667)
(1,098,594)
(864,938)
(86,582)
(655,111)
0
0
0
0
0
(10,006,957)
(33,977,377)
(13,267,960)
(1,326,162)
(5,920,508)
(61,537,072)
(2,961,892)
0
(64,498,964)
39,936,391
3,940,482
0
43,876,873
$58,936,954
$3,940,482
Business Type Activities Capital Assets, Net
Depreciation expense was charged to business-type activities as follows:
Sanitary Engineer
County Airport
County Information Systems
$1,969,221
371,755
598,142
22,774
Total
$2,961,892
- 56 -
($6,614,731)
$56,262,705
Note 12 - Interfund Transfers and Balances
Interfund Transfers
Interfund transfers for the year ended December 31, 2011, consisted of the following:
Transfers
In
Fund
Transfers
Out
Governmental Funds
General Fund
Human Services
Capital Projects
Global Center for Health Innovation
Other Governmental Funds
$328,278
175,000
147,001
231,738
11,828,903
40,174,080
34,484,530
$49,047,773
0
72,842
0
0
19,480,872
15,075,352
Total Governmental Funds
87,369,530
83,676,839
Proprietary Funds
Sanitary Engineer
Other Enterprise Funds
0
918,491
1,093,547
200,000
593,000
4,911,729
Total Proprietary Funds
2,012,038
5,704,729
$89,381,568
$89,381,568
Total Transfers
Transfers are used to move revenues from the fund that statute or budget requires to collect them to the fund
that statute or budget requires to expend them; to move unrestricted revenues collected in the general fund to
finance various programs accounted for in other funds in accordance with budgetary authorizations; to provide
additional resources for current operations or debt service; to segregate money for anticipated capital projects;
and to return money to the fund from which it was originally provided once a project is completed.
Interfund Balances
Interfund balances at December 31, 2011, consisted of the following amounts and represent charges for
services or reimbursable expenses. These remaining balances resulted from the time lag between the dates that
(1) interfund goods or services are provided or reimbursable expenditures occur, (2) transactions are recorded
in the accounting records, (3) payments between funds are made, and (4) elimination of deficit cash balances.
All are expected to be paid within one year.
- 57 -
Interfund
Receivable
Fund
Governmental Funds
General Fund
Human Services
Capital Projects
Interfund
Payable
$75,292,056
0
0
0
0
0
0
$1,807,566
911,643
74,917
551,422
23,363
73,099,821
960,017
75,292,056
77,428,749
Proprietary Funds
Sanitary Engineer
0
15,250
4,486,423
105,479
328,344
1,931,157
4,501,673
2,364,980
$79,793,729
$79,793,729
Total Interfund Receivable/Payable
Note 13 - Employee Retirement Systems
Ohio Public Employees Retirement System (OPERS)
Plan Description – The County participates in the Ohio Public Employees Retirement System (OPERS).
OPERS administers three separate pension plans. The Traditional Pension Plan is a cost-sharing, multipleemployer defined benefit pension plan. The Member-Directed Plan is a defined contribution plan in which the
member invests both member and employer contributions (employer contributions vest over five years at 20
percent per year). Under the Member-Directed Plan, members accumulate retirement assets equal to the value
of the member and vested employer contributions plus any investment earnings. The Combined Plan is a costsharing, multiple-employer defined benefit pension plan. Under the Combined Plan, OPERS invests employer
contributions to provide a formula retirement benefit similar in nature to, but less than, the Traditional Pension
Plan benefit. Member contributions, the investment of which is self-directed by the members, accumulate
retirement assets in a manner similar to the Member-Directed Plan.
OPERS provides retirement, disability, survivor and death benefits, and annual cost-of-living adjustments to
members of the Traditional Pension and Combined Plans. Members of the Member-Directed Plan do not
qualify for ancillary benefits. Authority to establish and amend benefits is provided by Chapter 145 of the
Ohio Revised Code. OPERS issues a stand-alone financial report. Interested parties may obtain a copy by
visiting https://www.opers.org/investments/cafr.shtml, writing to OPERS, 277 East Town Street, Columbus,
Ohio 43215-4642, or by calling 614-222-5601 or 800-222-7377.
Funding Policy – The Ohio Revised Code provides statutory authority for member and employer contributions
and currently limits the employer contribution to a rate not to exceed 14 percent of covered payroll for state
- 58 -
and local employer units and 18.1 percent of covered payroll for law and public safety employer units.
Member contribution rates, as set in the Ohio Revised Code, are not to exceed 10 percent of covered payroll
for members in State and local divisions and 12 percent for law enforcement and public safety members. For
the year ended December 31, 2011, members in state and local divisions contributed 10 percent of covered
payroll while public safety and law enforcement members contributed 11.0 percent and 11.6 percent,
respectively. While members in the state and local divisions may participate in all three plans, law
enforcement and public safety divisions exist only within the Traditional Pension Plan. For 2011, member and
employer contribution rates were consistent across all three plans.
The County’s 2011 contribution rate was 14.0 percent, except for those plan members in law enforcement or
public safety, for whom the County’s contribution was 18.10 percent of covered payroll. The portion of
employer contributions used to fund pension benefits is net of post-employment health care benefits. The
portion of employer contribution allocated to health care for members in the Traditional Plan was 4.00 percent
for 2011. The portion of employer contributions allocated to health care for members in the Combined Plan
was 6.05 percent for 2011. Employer contribution rates are actuarially determined.
The County’s required contributions for pension obligations to the Traditional Pension and Combined Plans
for the years ended December 31, 2011, 2010 and 2009 were $38,497,041, $52,257,193 and $56.9 million,
respectively. For 2011, 97.48 percent has been contributed with the balance being reported as an
intergovernmental payable. The full amount has been contributed for 2010 and 2009. Contributions to the
Member-Directed Plan for 2011 were $925,813 made by the County and $661,295 made by plan members.
State Teachers Retirement System (STRS)
Plan Description – The County participates in the State Teachers Retirement System of Ohio (STRS Ohio), a
cost-sharing multiple-employer public employee retirement system. STRS Ohio provides retirement and
disability benefits to members and death and survivor benefits to beneficiaries. STRS Ohio issues a standalone financial report that can be obtained by writing to STRS Ohio, 275 E. Broad St., Columbus, OH 432153771, by calling (888) 227-7877, or by visiting the STRS Ohio Web site at www.strsoh.org.
New members have a choice of three retirement plans; a Defined Benefit (DB) Plan, a Defined Contribution
(DC) Plan and a Combined Plan. The DB plan offers an annual retirement allowance based on final average
salary multiplied by a percentage that varies based on years of service, or an allowance based on a member’s
lifetime contributions and earned interest matched by STRS Ohio funds divided by an actuarially determined
annuity factor. The DC Plan allows members to place all their member contributions and employer
contributions equal to 10.5 percent of earned compensation into an investment account. Investment decisions
are made by the member. A member is eligible to receive a retirement benefit at age 50 and termination of
employment. The member may elect to receive a lifetime monthly annuity or a lump sum withdrawal. The
Combined Plan offers features of both the DB Plan and the DC Plan. In the Combined Plan, member
contributions are invested by the member, and employer contributions are used to fund the defined benefit
payment at a reduced level from the regular DB Plan. The DB portion of the Combined Plan payment is
payable to a member on or after age 60; the DC portion of the account may be taken as a lump sum payment or
converted to a lifetime monthly annuity at age 50. Benefits are established by Ohio Revised Code Chapter
3307.
A DB or Combined Plan member with five or more years of credited service who becomes disabled may
qualify for a disability benefit. Eligible spouses and dependents of these active members who die before
retirement may qualify for survivor benefits. Members in the DC Plan who become disabled are entitled only
- 59 -
to their account balance. If a member of the DC Plan dies before retirement benefits begin, the member’s
designated beneficiary is entitled to receive the member’s account balance.
Funding Policy - Chapter 3307 of the Ohio Revised Code provides statutory authority for member and
employer contributions. Contribution rates are established by the State Teachers Retirement Board, upon the
recommendation of its consulting actuary, not to exceed statutory maximum rates of 10 percent for members
and 14 percent for employers. For the fiscal year ended December 31, 2011, plan members were required to
contribute 10 percent of their annual covered salary. The County was required to contribute 14 percent; 13
percent was the portion used to fund pension obligations.
The County’s required contributions to STRS Ohio for the fiscal years ended December 31, 2011, 2010 and
2009 were $1,332,865, $1,425,180 and $1.5 million, respectively. The full amount has been contributed for
2011, 2010 and 2009. Contributions made to STRS Ohio for the DC and combined Plans for 2011 were
$73,575 made by the County and $52,553 made by the plan members.
Note 14 - Postemployment Benefits
Ohio Public Employees Retirement System (OPERS)
Plan Description – Ohio Public Employees Retirement System (OPERS) administers three separate pension
plans: The Traditional Pension Plan—a cost sharing, multiple-employer defined benefit pension plan; the
Member-Directed Plan—a defined contribution plan; and the Combined Plan—a cost sharing, multiple
employer defined benefit pension plan that has elements of both a defined benefit and defined contribution
plan.
OPERS maintains a cost-sharing multiple-employer defined benefit post-employment health care plan for
qualifying members of both the Traditional Pension and the Combined Plans. Members of the MemberDirected Plan do not qualify for ancillary benefits, including post-employment health care coverage. The plan
includes a medical plan, prescription drug program and Medicare Part B premium reimbursement.
In order to qualify for post-employment health care coverage, age-and-service retirees under the Traditional
Pension and Combined Plans must have 10 or more years of qualifying Ohio service credit. Health care
coverage for disability benefit recipients and qualified survivor benefit recipients is available. The Ohio
Revised Code permits, but does not mandate, OPERS to provide health care benefits to its eligible members
and beneficiaries. Authority to establish and amend benefits is provided in Chapter 145 of the Ohio Revised
Code.
Disclosures for the health care plan are presented separately in the OPERS financial report which may be
obtained by visiting https://www.opers.org/investments/cafr.shtml,writing to OPERS, 277 East Town Street,
Columbus, Ohio 43215-4642, or by calling 614-222-5601 or 800-222-7377.
Funding Policy – The post-employment health care plan was established under, and is administrated in
accordance with, Internal Revenue Code 401(h). The Ohio Revised Code provides the statutory authority
requiring public employers to fund post-retirement health care through contributions to OPERS. A portion of
each employer’s contribution to OPERS is set aside for the funding of post-retirement health care.
- 60 -
Employer contribution rates are expressed as a percentage of the covered payroll of active members. In 2011,
state and local employers contributed at a rate of 14.0 percent of covered payroll, and public safety and law
enforcement employers contributed at 18.10 percent. These are the maximum employer contribution rates
permitted by the Ohio Revised Code.
Each year, the OPERS Retirement Board determines the portion of the employer contribution rate that will be
set aside for funding of post-employment health care benefits. The portion of employer contributions allocated
to health care for members in the Traditional Plan was 4.0 percent from 2011. The portion of employer
contributions allocated to health care for members in the Combined Plan was 6.05 percent for 2011.
The OPERS Retirement Board is also authorized to establish rules for the payment of a portion of the health
care benefits provided, by the retiree or their surviving beneficiaries. Payment amounts vary depending on the
number of covered dependents and the coverage selected. Active members do not make contributions to the
post-employment health care plan.
The County’s contributions allocated to fund post-employment health care benefits for the years ended
December 31, 2011, 2010 and 2009 were $15,234,982, $18,892,874 and $24.3 million, respectively. For 2011,
97.48 percent has been contributed with the balance being reported as an intergovernmental payable. The full
amount has been contributed for 2010 and 2009.
The Health Care Preservation Plan (HCPP) adopted by the OPERS Retirement Board on September 9, 2004,
was effective January 1, 2007. Member and employer contribution rates increased on January 1 of each year
from 2006 to 2008. Rates for law enforcement and public safety employers increased over a six year period
beginning on January 1, 2006, with a final rate increase on January 1, 2011. These rate increases allowed
additional funds to be allocated to the health care plan.
State Teachers Retirement System (STRS)
Plan Description – The County participates in the cost-sharing multiple-employer defined benefit Health Plan
administered by the State Teachers Retirement System of Ohio (STRS Ohio) for eligible retirees who
participated in the defined benefit or combined pension plans offered by STRS Ohio. Ohio law authorizes
STRS to offer this plan. Benefits include hospitalization, physicians’ fees, prescription drugs and
reimbursement of monthly Medicare Part B premiums. The Plan is included in the report of STRS Ohio which
can be obtained by visiting www.strsoh.org or by calling (888) 227-7877.
Funding Policy – Ohio Revised Code Chapter 3307 authorizes STRS Ohio to offer the Plan and gives the
Retirement Board authority over how much, if any, of the health care costs will be absorbed by STRS Ohio.
Active employee members do not contribute to the Health Care Plan. All benefit recipients, for the most
recent year, pay a monthly premium. Under Ohio law, funding for post-employment health care may be
deducted from employer contributions. For 2011, STRS Ohio allocated employer contributions equal to 1
percent of covered payroll to post-employment health care. The County’s contributions for health care for the
fiscal years ended December 31, 2011, 2010 and 2009 were $102,528, $101,799 and $.1 million respectively.
The full amount has been contributed for 2011, 2010 and 2009.
- 61 -
Note 15 - Other Employee Benefits
County employees become eligible to receive one-fourth of their accumulated unpaid sick leave up to a
maximum of thirty days upon retirement with a minimum of ten years of service. Certain agencies may have
policies that vary with regard to payment of accrued sick leave upon retirement.
Employees with a minimum of one year of service become vested in accumulated unpaid vacation time.
Vacation time may not be accumulated for more than three years. Unused vacation time is payable upon
termination of employment.
Compensatory time (Comp time) and exchange time are accrued for actual time worked. Comp time is
granted to non-exempt employees and exchange time is granted to exempt employees. Comp time is earned at
1.5 hours for every hour worked. Exchange time is earned on an hour-for-hour basis. Comp time must be
used within 180 days or it will be paid out. Exchange time must be used within six months or it expires.
Exchange time is not paid out.
All sick, vacation, compensatory and overtime payments are made at the employee’s current wage rate.
Balances for compensated absences are kept at various department levels, therefore, the data is only combined
annually for reporting purposes.
Retirement Incentive
In May 2008, the Board of County Commissioners authorized the purchase of additional service credit equal to
20 percent of accumulated service time up to a maximum of 3 years under Ohio Public Employee Retirement
System for certain employees close to retirement as an incentive to retire early. The Early Retirement
Incentive Program was approved for participating departments and agencies of the County by agreement with
the previous County Commissioners for a period of 1 year commencing January 15, 2009. As of December
31, 2011, there were 923 employees participating at a cost of $9.7 million paid over a 2 year period at a rate of
8 percent.
Health Care Benefits
Some County departments provide life and accidental death insurance to their employees through various life
insurance companies. During 2011, the County contracted with several insurance companies for employee
medical, prescription dental and vision benefits as follows:
Company
Kaiser Permanente
United Healthcare
Medical Mutual of Ohio
MetroHealth
CVS Caremark
Guardian Life Insurance Company
Union Eye Care
Northwest Group Services
Mangrove Employer Services
Benefit Provided
Medical
Medical
Medical
Medical and Prescription Drugs
Prescription Drugs
Dental
Vision
Flexible Spending Accounts
COBRA Services
- 62 -
Note 16 - Long-Term Debt
The original issue date, interest rate and original issuance amount for each of the County’s bonds are as
follows:
Original
Issue
Date
Debt Issue
General Obligation Bonds - Voted:
1993 Jail Facilities Refunding Bonds
General Obligation Bonds - Unvoted:
1993B Various Purpose Refunding Bonds
1993 Rock and Roll Hall of Fame Bonds
2004 Capital Improvement Bonds
2005 General Obligation Refunding Bonds
2009 Capital Improvements Bonds
Revenue Bonds
1992 Gateway Economic Development
2004 Gateway Arena Refunding Bonds
2004 Brownfield Redevelopment Refunding Bonds
2010 Brownfield Redevelopment Bonds
2010 Commercial Redevelopment Bonds
2010 Gateway Arena Refunding Bonds
2010 Shaker Square Refunding Bonds
2010 Economic Development - GCHI
Loans Payable
1997 Ohio Department of Development - Gateway
2005 Ohio Department of Transportation - Pleasant
2006 Ohio Public Works Commission - Schaaf Road Bridge
2009 Ohio Department of Transportation - Crocker
Bond Anticipation Notes
2010 Rock and Roll
2011 Rock and Roll
Business-Type Activities
Self-Supporting Bonds Payable
2000 Sewer Improvement
OWDA Loans
Cuyahoga County Lab
Interceptor Sewer Construction
Trunk Sewer Construction
Scottish Highlands Sewer
- 63 -
Interest Rate
Original
Issue
Year of
Maturity
1993
2.20 - 5.25 %
$48,960,000
2013
1993
1993
2004
2005
2009
2.20 - 5.25
2.75 - 5.65
2.50 - 5.25
3.00 - 5.00
1.62 - 6.03
75,395,000
12,000,000
84,490,000
73,970,000
163,825,000
2012
2018
2024
2020
2034
1992
2004
2004
2010
2010
2010
2010
2010
8.63
1.50 - 4.25
1.50 - 5.10
1.04 - 5.93
1.04 - 5.93
1.04 - 5.03
1.00 - 4.12
1.55 - 6.20
35,000,000
10,750,000
12,880,000
17,160,000
11,105,000
42,070,000
2,800,000
343,350,000
2022
2011
2018
2030
2030
2030
2030
2027
1997
2005
2006
2009
0.00
3.00
0.00
3.00
10,000,000
3,844,791
1,251,250
5,257,016
2016
2011
2027
2019
2010
2011
1.50
1.94
10,150,000
10,320,000
2011
2015
2000
2003
2005
4.55 - 5.55
2.00 - 3.55
2.00 - 3.55
1,040,000
1,500,000
4,445,000
2020
2012
2025
2002
2002
1999
1998
4.18
4.18
4.04
4.04
1,487,338
270,471
1,935,141
1,225,007
2016
2016
2019
2018
Original
Issue
Date
Debt Issue
Business-Type Activities (continued)
OWDA Loans (continued)
CSO Improvements
Suffolk Estates Pump Station
Woods Pump Station
CSO Improvements/E 38th 40th St
Fitch Road Sanitary Sewer
Echo Hills WWTP Elimination
Stearns & Cook Rds Sanitary Sewer
Cook Mackenzie Sanitary Sewer
Thornapple Pump Station
Sewer Repairs
Fernhill Sewer Replacement
North Granger Sewer Replacement
Dewey Rd Pump Station
OPWC Loans
Sanitary Sewer Improvement
Sanitary Sewerage Facilities Rehab
North County Trunk Sewer Improvement
MetroHealth Sanitary Sewer
Sanitary Sewer System Improvement
Interest Rate
Original
Issue
Year of
Maturity
2006
2007
2008
2008
2008
2009
2010
2010
2010
2011
2011
2011
2011
3.35 %
3.25
3.25
3.25
3.25
3.36
3.53
3.52
3.70
3.25
2.66
2.62
3.28
$333,668
231,368
612,192
807,805
1,558,386
1,937,877
513,754
683,099
956,072
2,144,266
1,562,868
486,347
2,642,665
2025
2026
2027
2027
2027
2028
2030
2029
2029
2032
2032
2031
2032
1992
1995
1999
1997
2010
0.00
0.00
0.00
0.00
0.00
1,023,209
746,824
453,919
130,654
236,210
2012
2015
2019
2018
2031
Changes in the County's long-term obligations during the year ended December 31, 2011, consist of the
following:
Outstanding
12/31/10
General Obligation Bonds - Voted:
1993 Jail Facilities and Various Purpose Refunding
Term Bonds
Capital Appreciation Bonds
Accretion on Capital Appreciation Bonds
Total General Obligation Bonds - Voted
Additions
Reductions
Outstanding
12/31/11
Amounts
Due in
One Year
$3,315,000
946,949
11,963,631
$0
0
1,827,424
$1,050,000
363,106
5,156,894
$2,265,000
583,843
8,634,161
$1,105,000
313,197
5,201,803
$16,225,580
$1,827,424
$6,570,000
$11,483,004
$6,620,000
- 64 -
Outstanding
12/31/10
Additions
Reductions
Outstanding
12/31/11
Amounts
Due in
One Year
Governmental Activities (continued)
General Obligation Bonds - Unvoted:
1993B Various Purpose Refunding Term Bonds
1993 Rock and Roll Hall of Fame Serial Bonds
2004 Capital Improvement Serial Bonds
Unamortized Premium
2005 General Obligation Refunding Bonds
Unamortized Premium
2009 Capital Improvement Bonds
Serial Bonds
Building America Bonds - Serial
Building America Bonds - Term
Recovery Zone Economic
Development Bonds - Serial
Development Bonds - Term
Unamortized Premium
Total General Obligation Bonds - Unvoted
Revenue Bonds
1992 Gateway Economic Development
2004 Gateway Arena Refunding
2004 Brownfield Redevelopment Refunding
2010 Brownfield Redevelopment Bonds
Serial Bonds
Term Bonds
2010 Commercial Redevelopment Bonds
Serial Bonds
Term Bonds
2010 Gateway Arena Refunding
2010 Shaker Square Refunding
Serial Bonds
Term Bonds
Unamortized Premium
2010 Economic Development - GCHI
Taxable GCHI Revenue Bonds
Serial Bonds
Term Bonds
Tax Exempt GCHI Revenue Bonds
Development Bonds - Serial
Recovery Zone Facility Bonds - Serial
Recovery Zone Facility Bonds - Term
Unamortized Premium
Total Revenue Bonds
$1,380,000
5,625,000
63,450,000
4,673,480
67,230,000
5,499,580
$0
0
0
0
0
0
$675,000
575,000
4,110,000
302,726
6,075,000
496,950
$705,000
5,050,000
59,340,000
4,370,754
61,155,000
5,002,630
$705,000
610,000
4,310,000
0
6,760,000
0
73,140,000
8,230,000
35,740,000
0
0
0
4,220,000
50,000
0
68,920,000
8,180,000
35,740,000
4,305,000
50,000
0
7,985,000
0
50,000
7,935,000
50,000
34,740,000
6,288,122
0
0
0
169,954
34,740,000
6,118,168
0
0
313,981,182
0
16,724,630
297,256,552
16,790,000
35,000,000
1,700,000
8,240,000
0
0
0
0
1,700,000
870,000
35,000,000
0
7,370,000
0
0
910,000
11,160,000
6,000,000
0
0
595,000
0
10,565,000
6,000,000
600,000
0
7,250,000
3,855,000
42,070,000
0
0
0
385,000
0
3,045,000
6,865,000
3,855,000
39,025,000
390,000
0
4,475,000
925,000
1,810,000
122,837
0
0
0
60,000
0
2,695
865,000
1,810,000
120,142
65,000
0
0
91,270,000
31,845,000
0
0
4,525,000
0
86,745,000
31,845,000
15,620,000
0
20,000,000
174,235,000
26,000,000
14,152,730
0
0
0
0
0
0
0
186,518
20,000,000
174,235,000
26,000,000
13,966,212
0
0
0
0
$475,635,567
$0
$11,369,213
$464,266,354
$22,060,000
- 65 -
Outstanding
12/31/10
Additions
Reductions
Outstanding
12/31/11
Amounts
Due in
One Year
Governmental Activities (continued)
Loans Payable
Ohio Department of Development - Gateway
Ohio Department of Transporation - Pleasant
Ohio Public Works Commission - Schaaf Bridge
Ohio Department of Transportation - Crocker
$3,000,000
630,061
1,001,000
5,178,298
$0
0
0
76,865
$500,000
630,061
62,562
293,055
$2,500,000
0
938,438
4,962,108
$500,000
0
62,562
599,363
9,809,359
76,865
1,485,678
8,400,546
1,161,925
Other Long-Term Obligations:
Bond Anticipation Notes - 2010 Rock and Roll
Bond Anticipation Notes - 2011 Rock and Roll
Capital Lease
10,150,000
0
27,917,157
20,850,538
28,090,317
0
10,320,000
2,312,181
122,066,783
0
10,150,000
1,020,000
3,399,657
22,834,975
18,486,688
0
9,300,000
26,829,681
120,082,346
9,603,629
0
2,100,000
924,312
21,813,656
9,476,016
Total Other Long-Term Obligations
87,008,012
134,698,964
55,891,320
165,815,656
34,313,984
$902,659,700
$136,603,253
$92,040,841
$947,222,112
$80,945,909
Total Loans Payable
Outstanding
12/31/10
Additions
Reductions
Outstanding
12/31/11
Amounts
Due in
One Year
Business Type Activities
Self-Supported Bonds Payable
2000 Sewer Improvement - Spec. Assessments
2003 Sewer Improvement Refunding - Serial
$645,000
365,000
3,600,000
$0
0
0
$50,000
180,000
185,000
$595,000
185,000
3,415,000
$55,000
185,000
190,000
Total Self-Supported Bonds Payable
4,610,000
0
415,000
4,195,000
430,000
OWDA Loans
Cuyahoga County Lab
Interceptor Sewer Construction
Trunk Sewer Construction
Scottish Highlands Sewer
CSO Improvements
Woods Pump Station
Sewer Repairs
493,803
97,684
962,341
543,270
234,972
159,290
467,557
658,434
1,326,095
1,441,507
481,483
550,394
769,543
0
0
0
0
0
0
0
0
0
0
26,592
0
0
54,894
0
23,637
32,422
1,837,550
1,266,869
346,938
1,279,694
90,763
16,156
104,141
68,614
14,343
9,678
24,796
32,718
63,119
75,338
18,371
25,320
34,868
0
0
9,328
0
403,040
81,528
858,200
474,656
220,629
149,612
469,353
625,716
1,262,976
1,421,063
463,112
548,711
767,097
1,837,550
1,266,869
337,610
1,279,694
94,596
16,835
108,390
71,414
0
0
0
0
0
0
0
0
0
0
0
0
0
$8,186,373
$4,868,596
$587,553
$12,467,416
$291,235
Total OWDA Loans
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Outstanding
12/31/10
Additions
Reductions
Outstanding
12/31/11
Amounts
Due in
One Year
Business Type Activities (continued)
OPWC Loans
Sanitary Sewer Improvement
Sanitary Sewerage Facilities Rehab
North County Trunk Sewer Improvement
MetroHealth Sanitary Sewer
Sanitary Sewer System Improvement
$76,637
149,365
192,915
48,995
217,843
$0
0
0
0
18,367
$51,091
37,341
22,696
6,532
5,905
$25,546
112,024
170,219
42,463
230,305
$25,546
37,342
22,696
6,532
11,810
Total OPWC Loans
685,755
18,367
123,565
580,557
103,926
Other Long-Term Obligations
175,276
760,735
0
0
119,394
110,031
55,882
650,704
55,882
22,418
936,011
0
229,425
706,586
78,300
$14,418,139
$4,886,963
$1,355,543
$17,949,559
$903,461
Total Business-Type Activities
The self-supported bonds payable will be paid from charges for services revenue in the enterprise funds. The
business-type activities’ OWDA and OPWC loans will be paid from charges for services revenue in the
enterprise funds. Self-supporting bonds are secured by an unvoted property tax levy; however, each bond
indenture provides for principal and interest to also be paid from user charges.
The general obligation and revenue bonds will be paid with property taxes in the debt service fund. The
Gateway Ohio Department of Development loan will be paid with non-tax revenue in the general fund. The
OPWC loan for Schaaf Bridge will be paid with property taxes in the debt service fund. The Ohio Department
of Transportation loans will be paid with motor vehicle license tax in the debt service fund. The Rock and
Roll bond anticipation notes will be paid with 1.50 percent lodging tax in the debt service fund.
Compensated absences and special termination benefits will be paid from the fund from which the employee is
paid. These funds include the general, alcohol, drug and mental health, community development, County
board of developmental disabilities, court, human services, motor vehicle and gas tax, real estate assessment,
delinquent real estate assessment, Cuyahoga County support enforcement, victim assistance, other health and
safety, other legislative and executive, other judicial, County airport, County information systems, sanitary
engineer, County parking garage, maintenance garage, printing, reproduction and supplies, central custodial
services, data processing, workers’ compensation and health insurance funds. Capital Leases will be paid from
the human services and postage funds.
In 1993, the County defeased outstanding debt of $115.6 million which consisted of $49.6 million and $66
million of voted and unvoted debt, respectively in order to take advantage of lower interest rates. The
proceeds of the new bonds were placed in an irrevocable trust to provide for all future debt service payments
on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are not included
in the County’s financial statements. On December 31, 2011, $1,018,197 of the defeased bonds are still
outstanding.
In May 2003, the County Commissioners authorized by resolution a loan in the amount of $10 million from
the Ohio Department of Transportation (ODOT) of which a total of $3.7 million was borrowed. In March
2006, the County Commissioners authorized by resolution a second loan in the amount of $8.25 million from
ODOT of which $3.6 million was borrowed in 2009, and another $1.6 million was borrowed in 2010. The
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loans are provided through the State Infrastructure Bank fund, which are federal funds, to be used for road and
bridge improvements. Both loans carry a 0 percent interest rate for the first 12 months and a 3 percent rate
thereafter, for 10 years. In August 2005, the County Commissioners by resolution accepted a grant/loan from
the Ohio Public Works Commission (Issue I) in the amount of $2.5 million split evenly between a grant and a
loan. This loan carries a 0 percent interest rate for 20 years. The County pledged its motor vehicle license tax
as the source of repayment for all loans. In the event that the motor vehicle license tax would fail to pay the
loans, payment would be made by any general tax revenues collected in the general fund.
During 2009, the County issued $163,825,000 in Capital Improvement Bonds. The issue consisted of tax
exempt serial bonds, Build America Bonds (BABs) and Recovery Zone Economic Development Bonds
(RZEDBs). As part of the American Recovery and Reinvestment Act of 2009, Congress added Sections 54AA
and 6431 to the Code, which permit state or local governments to obtain certain tax advantages when they
issue BABs and RZEDBs. Under Section 6431 of the Code, the County may elect to receive payments
directly from the Secretary of the United States Treasury equal to 35 percent of the corresponding interest
payable on this issue.
In May 2010, the County issued $10,150,000 in one year limited tax general obligation bond anticipation notes
with an interest rate of 1.5 percent due May 2011. The notes were issued for use by the Rock and Roll Hall of
Fame for its Library and Archives project. The notes were to be repaid from the existing 1.5 percent bed tax
once the 1993 County Rock and Roll Hall of Fame bonds had been reimbursed from the same tax. In May
2011, the net proceeds from the Rock and Roll Hall of Fame and Museum Project notes, Series 2011 were
used to redeem the Series 2010 notes. The new notes were issued amounting to $10,320,000 at an interest rate
of 1.94 percent with maturity on December 1, 2015. The notes will be repaid from the debt service fund.
In September 2010, the County issued $73,135,000 in revenue bonds. This bond issuance is comprised of
Brownfield and Commercial Redevelopment loan funds amounting to $17,160,000 and $11,105,000,
respectively, both taxable at the true interest cost of 5.2 percent. The second issuance was to refund
outstanding debt for the Gateway Arena and Shaker Square projects at $42,070,000 taxable and $2,800,000
tax-exempt, at a true interest cost of 4.4 percent and 3.9 percent, respectively. The bonds are being repaid in
the community development special revenue and debt service funds.
In December 2010, the County issued Series 2010 (Global Center for Health Innovation/Convention Center
Project) Bonds in three series as follows: $20,000,000 Recovery Zone Economic Development Revenue Bond
Series 2010E, $200,235,000 Tax-Exempt Recovery Zone Facility Economic Development Revenue Bonds,
Series 2010F and $123,115,000 Taxable Economic Development Revenue Bonds, Series 2010G. The bonds
are being repaid in the GCHI capital projects fund.
The County has entered into a contractual agreement for construction loans from the Ohio Water Development
Authority (OWDA). Under the terms of this agreement, OWDA will reimburse, advance or directly pay the
construction costs of the approved projects. OWDA will capitalize administrative costs and construction
interest and then add them to the total amounts of the final loans. These loans will not have an accurate
repayment schedule until the loans are finalized and, therefore, are not included in the schedule of future
annual debt service requirements. The balances of the loans are as follows:
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Outstanding
12/31/11
CSO Improvements
Woods Pump Station
Sewer Repairs
Totals
$220,629
149,612
469,353
625,716
1,262,976
1,421,063
463,112
548,711
767,097
1,837,550
1,266,869
337,610
1,279,694
$10,649,992
The Ohio Revised Code provides that the net general obligation debt of the County, exclusive of certain
exempt debt, issued without a vote of the electors shall never exceed one percent of the total assessed
valuation of the County. The Code further provides that the total voted and unvoted net debt of the County
less the same exempt debt shall never exceed a sum equal to 3 percent of the first $100,000,000 of the assessed
valuation, plus 1 1/2 percent of such valuation in excess of $100,000,000 and not in excess of $300,000,000,
plus 2 1/2 percent of such valuation in excess of $300,000,000.
The effects of the debt limitations described above at December 31, 2011, are an overall debt margin of
$513,885,986; and an unvoted debt margin of $148,983,326
Principal and interest requirements to retire the County’s long-term obligations outstanding at December 31,
2011 are as follows:
Serial and Term
Principal
Interest
Capital Appreciation Bonds
Principal
Interest
Revenue Bonds
Serial and Term
Principal
Interest
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2030
$17,795,000
16,885,000
15,485,000
16,125,000
15,830,000
80,955,000
34,360,000
0
$9,304,182
8,535,316
7,814,846
7,147,187
6,395,046
19,978,801
3,348,425
0
$313,197
270,646
0
0
0
0
0
0
$5,201,803
5,249,354
0
0
0
0
0
0
$22,060,000
23,185,000
25,150,000
25,860,000
26,910,000
74,835,000
23,430,000
8,515,000
$10,511,054
9,952,963
9,156,924
8,156,261
7,033,409
18,228,747
4,493,168
1,034,532
Total
$197,435,000
$62,523,803
$583,843
$10,451,157
$229,945,000
$68,567,058
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Recovery Zone Facility Bonds
Serial and Term
Principal
Interest
Principal
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2030
$0
0
0
0
0
59,750,000
130,385,000
10,100,000
9,999,156
9,999,156
9,999,156
9,999,156
9,999,156
47,335,780
22,593,780
505,000
$1,161,925
1,180,042
1,198,705
1,217,931
1,237,741
2,091,389
312,813
0
$153,853
129,879
107,622
88,395
68,586
80,831
0
0
$2,100,000
2,100,000
3,100,000
2,000,000
0
0
0
0
$180,420
139,680
98,940
38,800
0
0
0
0
Total
$200,235,000
$120,430,340
$8,400,546
$629,166
$9,300,000
$457,840
Development Bonds (RZEDBs)
Serial and Term
Principal
Interest
Loans
Notes
Interest
Build America Bonds (BABs)
Serial and Term
Principal
Interest
Principal
Subsidy
Interest
Total
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2031
2032 - 2034
$50,000
50,000
50,000
50,000
50,000
250,000
7,435,000
40,545,000
14,195,000
3,796,238
3,795,172
3,793,982
3,792,415
3,790,774
18,921,201
18,664,371
9,446,089
1,758,006
$50,000
50,000
50,000
50,000
50,000
260,000
7,670,000
21,140,000
14,600,000
$2,556,238
2,555,172
2,553,982
2,552,415
2,550,774
12,721,201
12,464,371
8,206,089
1,758,006
($2,599,312)
(2,598,460)
(2,597,507)
(2,596,254)
(2,594,940)
(12,948,605)
(12,743,612)
(7,111,179)
(1,403,931)
$3,853,164
3,851,884
3,850,457
3,848,576
3,846,608
19,203,797
33,490,130
72,225,999
30,907,081
Total
$62,675,000
$67,758,248
$43,920,000
$47,918,248
($47,193,800)
$175,077,696
Business-Type Activities
Principal
Interest
OWDA Loans
Principal
Interest
OPWC
Loan
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2031
$430,000
250,000
265,000
270,000
285,000
1,525,000
1,170,000
0
$174,036
157,820
147,998
136,528
124,858
427,458
119,400
0
$291,235
303,278
315,815
328,871
220,822
357,403
0
0
$54,886
59,095
46,557
33,501
21,058
16,431
0
0
$103,926
78,381
78,380
41,040
41,039
125,591
59,052
53,148
Total
$4,195,000
$1,288,098
$1,817,424
$231,528
$580,557
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Note 17 - Conduit Debt Obligations
Periodically, the County has issued Industrial Development, Hospital Revenue, and Mortgage Revenue Bonds
to provide financial assistance to private-sector entities for the acquisition and construction of industrial,
commercial, and hospital facilities deemed to be in the public interest. These bonds are secured by the
property financed and are payable solely from payment received on the underlying mortgage loans. The bonds
do not constitute a debt or pledge of the full faith and credit of the County, and, therefore, are not reported in
the financial statements. Upon repayment of the bonds, ownership of the acquired facilities transfers to the
private sector entity served by the bond insurance.
As of December 31, 2011, the aggregate principal amounts outstanding for Industrial Development, Hospital
Revenue, and Mortgage Revenue Bonds were approximately $546 million, $2 billion, and $227 million
respectively.
Note 18 - Leases
Operating Leases
The County is the lessee in 52 operating lease agreements for various purposes. The aggregate annual
rental payments under those agreements for 2011 totaled $5,151,882. The terms of all of these agreements
are for ten years or less. The following is a schedule by years of minimum future rentals on the operating
leases as of December 31, 2011:
Year Ending December 31,
Governmental
Funds
2012
2013
2014
2015
2016
2017 - 2020
Total minimum lease payments
Internal
Service
Funds
4,965,398
4,195,986
3,569,984
1,695,912
1,135,405
3,343,304
$54,288
54,288
49,764
0
0
0
$18,905,989
$158,340
Capital Leases
The County has entered into several lease agreements for various purposes. These lease obligations meet the
criteria of a capital lease and have been recorded on the government-wide statements. The leases have been
capitalized in the amount of $58,567,657, the present value of the minimum lease payments at the inception of
the lease in governmental activities.
- 71 -
The assets acquired through capital leases are as follows:
Governmental
Funds
Asset:
Land
Building
$7,626,196
50,941,461
Total Original Cost
Less: Accumulated Depreciation
58,567,657
(16,581,073)
Total Book Value as of December 31, 2011
$41,986,584
The following is a schedule of the future long-term minimum lease payments required under the capital lease
and present value of the minimum lease payments is as follows:
Year Ending December 31,
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2029
Governmental
Funds
$4,765,350
4,313,933
4,139,957
4,152,012
3,957,681
983,483
64,125
34,000
Total
Less: Amount Representing Interest
Present Value of Net Minimum Lease Payments
22,410,541
(6,161,763)
$16,248,778
The County has entered into a contractual agreement for the construction of the Global Center for Health
Innovation facility with MMPI Cleveland Development LLC (Developer). This lease will not have an
accurate repayment schedule until the lease is finalized and, therefore, is not included in the schedule of future
annual debt service requirements. The County paid $18,233,215 on the lease during 2011 leaving a remaining
balance of $103,833,568 as December 31, 2011. See Note 19 for additional information on the Global Center
for Health Innovation.
Capital lease payments have been reclassified and are reflected as debt service in the fund financial statements
for the human services special revenue fund and the GCHI capital projects fund. These expenditures are
reflected as program expenditures on a budgetary basis.
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Note 19 – Global Center for Health Innovation
During 2009, the County entered into an agreement with Merchandise Mart Properties, Inc. (MMPI), MMPI
Cleveland Development LLC (Developer) and Cleveland MMCC LLC (Operator) for the development and
operation of the Global Center for Health Innovation (Facility). Global Center for Health Innovation is an
integrated facility for a permanent exhibition hall for medical devices and equipment as well as a temporary
exhibition, tradeshow and conference facility and back of house functions.
During 2010 the County purchased land for the GCHI site. The County subsequently leased the purchased
land to the Developer for $1 annually. This lease meets the definition of an operating lease under GASB 62
“Codification of Accounting and Financial Report Guidance Contained in Pre-November 30, 1989 FASB and
AICPA Pronouncements.” At December 31, 2011, the carrying value of the land is $37,912,642.
The County entered into a project funding agreement with the Developer to provide funds, through a loan
from the County, for the planning, designing, financing and constructing the Facility. The total project budget
of $465,000,000 includes sources of $343,350,000 in Economic Development Revenue Bond proceeds and a
contribution of non-bond proceeds from the County. Under the terms of this agreement, the County will
reimburse, advance or directly pay the construction costs of the Facility. The Developer will make monthly
payments of $3,000,000 through 2027. As of December 31, 2011, the Developer has drawn down
$122,066,783 of the available funds. During 2011, the Developer repaid $18,233,215 leaving an outstanding
balance of $103,833,568.
The County entered into a lease agreement with the Developer for the Facility. This lease meets the definition
of a capital lease under GASB 62. The County will make monthly lease payments of $3,333,333 through
2027. As of December 31, 2011, the book value of the capitalized leased assets was $122,066,783 which is
reported as construction in progress.
Although the Facility remains under construction, the County subleased the Facility to the Operator in
exchange for the Operator maintaining the asset in lieu of rental payments. The Operator is to operate the
Facility solely as a convention center and medical merchandise showroom, including setting the rates. This
operating lease expires in 2027.
Note 20 - Risk Management
Health Insurance
The County has elected to provide medical benefits (with respect to three of its medical plans) and its
prescription drug plan through a self insured program. The maintenance of these benefits is accounted for in
the self-funded hospitalization internal service fund. The County purchased excess coverage insurance (stop
loss) policy with Sun Life Assurance Company of Canada. Incurred but not reported claims of $10,958,961
have been accrued as a liability based on a review of January 2012 billings provided by the County Fiscal
Officer’s Office. The claims liability is based on the requirements of Governmental Accounting Standards
Board Statement No. 30 which requires that a liability for unpaid claims costs, including estimates of costs
relating to incurred but not reported claims, be reported. The estimate was not affected by incremental claim
adjustment expenses and does not include other allocated or unallocated claims adjustment expenses. Changes
in the fund’s claims liability amounts for 2010 and 2011 were:
- 73 -
2010
2011
Balance at
Beginning
of Year
$5,997,000
6,019,908
Current Year
Claims
$58,447,000
66,350,750
Claim
Payments
$58,424,092
61,411,697
Balance at
End of Year
$6,019,908
10,958,961
Property and Liability
The County is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets;
errors and omissions; injuries to employees and natural disasters. During 2011, the County contracted with
several insurance companies for insurance coverage as follows:
Company/Type of Insurance
FMGlobal/Factory Mutual Insurance Company
Property Insurance
Travelers Casualty & Surety Company of America
Crime and Dishonesty
Travelers Indemnity Insurance Company
Excess Property Insurance
US Liberty Insurance Company
Workforce Investment Board
Directors and Officer
Lloyd's London
Force-Placed Builder's Risk
Liability
Property
Darwin Select Insurance Company
Community Based Correctional Facility Governing Board
E&O/EPL Professional Liability
Coverage
$500,000,000
1,000,000
250,000
1,000,000
1,000,000
100,000
1,000,000
Settled claims have not exceeded coverage in any of the last three years and there was no significant reduction
in coverage from the prior year.
Workers’ Compensation
The County participates in the State Workers’ Compensation retrospective rating and payment system. Once
the County receives notice of the 2011 claims paid by the Bureau of Workers’ Compensation, the County will
reimburse the State for claims paid on the County’s behalf. The payable is reclassified from claims payable to
intergovernmental payable. This plan involves the payment of a minimum premium for administrative
services and stop-loss coverage in addition to the actual claim costs for employees injured in 2011. The
maintenance of these benefits is accounted for in the Workers’ Compensation internal service fund.
Incurred but not reported claims and premium of $8,674,127 have been accrued as a liability at December 31,
2011, based on an estimate by the County Fiscal Officer’s Office and the Bureau of Workers’ Compensation.
The claims liability reported in the workers’ compensation internal service fund at December 31, 2011, is
based on the requirements of Governmental Accounting Standards Board Statement No. 30 which requires that
a liability for unpaid claims costs, including estimates of costs relating to incurred but not reported claims, be
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reported. The estimate was not affected by incremental claim adjustment expenses and does not include other
allocated or unallocated claims adjustment expenses. Changes in the fund’s claims liability amounts for 2010
and 2011 were:
2010
2011
Balance at
Beginning
of Year
$11,523,937
9,788,937
Current Year
Claims
$438,000
1,609,523
Claim
Payments
$2,173,000
2,724,333
Balance at
End of Year
$9,788,937
8,674,127
Note 21 – Significant Commitments
Encumbrances
Encumbrances are commitments related to unperformed contracts for goods or services. Encumbrance
accounting is utilized to the extent necessary to assure effective budgetary control and accountability and to
facilitate effective cash planning and control. At year end the amount of encumbrances expected to be
honored upon performance by the vendor in the next fiscal year were as follows:
Governmental Funds
General
Human Services
Alcohol, Drug, and Mental Health
Capital Projects
$8,313,252
35,424,248
7,011,197
7,173,125
2,697
13,557,857
133,892,745
205,375,121
Proprietary Funds
Sanitary Sewer
3,115,201
532,747
23,150,076
26,798,024
Total
$232,173,145
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Contractual Commitments
At December 31, 2011, the County’s significant contractual commitments consisted of the following:
Project
Contract
Amount
Amount
Paid
Remaining
on Contract
Road and Bridge Projects
Monticello Boulevard
Eastland Road and Bridge
Royalton Road/West 130th Street
Bainbridge Road
Pleasant Valley Road
Rockside Road
Bagley Road
Sprague Road
Stumph Road
Fitch Road Grade
Tiedeman Road
Old Mill Road Bridge
Columbus Lift Bridge
$1,484,119
18,000,000
2,213,352
11,983,999
3,221,336
4,344,382
3,787,405
4,837,942
6,696,971
4,954,904
2,233,539
1,163,153
30,323,619
$1,020,749
16,333,878
1,995,259
10,404,875
2,946,253
3,869,448
3,055,101
4,218,255
2,848,106
3,232,286
1,377,302
741,354
0
$463,370
1,666,122
218,093
1,579,124
275,083
474,934
732,304
619,687
3,848,865
1,722,618
856,237
421,799
30,323,619
Total Road and Bridge Projects
95,244,721
52,042,866
43,201,855
Sanitary Sewer Projects
Sewer and Lateral Repair
Sewer Lining and Rehabilitation
Dewey Road Pump Station
North Granger Road
Grannis Thraves
1,529,060
2,085,626
2,308,050
463,115
378,993
1,214,556
2,038,910
2,103,909
365,386
340,428
314,504
46,716
204,141
97,729
38,565
Total Sanitary Sewer Projects
6,764,844
6,063,189
701,655
$102,009,565
$58,106,055
$43,903,510
Total Contractual Commitments
Note 22 - Contingent Liabilities
Grants
The County has received federal and state grants for specific purposes that are subject to review and audit by
the grantor agencies or their designee. These audits could lead to a request for reimbursement to the grantor
agency for expenditures disallowed under terms of the grant. Based on prior experience, the County Council
believe such disallowances, if any, will be immaterial.
Litigation
The County is party to various legal proceedings seeking damages or injunctive or other relief and generally
incidental to its operations. These proceedings are unrelated to any outstanding County debt or the security for
any outstanding County debt. The ultimate disposition of these proceedings is not now determinable, but will
not, in the opinion of the County Prosecuting Attorney, have a material adverse effect on any outstanding
County debt or the security for any outstanding County debt or the operating revenues of the County.
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Since 2008, sixteen former County officials and employees have been charged in United States District Court
with violations of federal law, including bribery. The charges have stemmed from an FBI investigation into
public corruption within the County. Of those charged, eleven, including the former County Auditor, have
pleaded guilty. In addition, three former government officials, including a former County Commissioner and
one former employee have been convicted of public corruption charges after trials. Finally, two former
County employees have been charged and have pleaded guilty in the State criminal justice system. One
former County employee has pleaded not guilty and is awaiting trial.
In connection with the foregoing charges, the County has received approximately $3.6 million in forfeitures
paid by the defendants in the various aforementioned criminal cases. In addition, the County received a total
of $2.1 million in restitution payments made directly to the County by individuals convicted in such cases.
In 2009, the County engaged independent counsel to investigate the effect of the investigation and the criminal
charges on the County’s financial position. That independent counsel issued an initial report in 2009 and an
updated report in 2011. Based on the findings of independent counsel set forth in those reports and a review
by representatives of the County Prosecutor’s office, as of the date of this report, the County does not believe
that the investigation, or any criminal charges or convictions resulting from the investigation, will have a
material effect on the future financial position of the County.
Note 23 - Related Organizations
Cuyahoga County Public Library (the Library) The Cuyahoga County Executive and the Common Pleas
Judges appoint the seven member Board of Trustees for the Library. Appointments are for seven year terms
and members serve without compensation. The Library determines and operates its own budget. Control and
management of the Library is governed by sections 3375.33 to 3375.39 of the Ohio Revised Code. The
Library provides no financial benefit to or burden on the County.
Cleveland Metropolitan Park District (the District) The County Probate Court appoints the three member
Board of Park Commissioners for the District. Appointments are for three year terms. The District is
dedicated to the conservation of natural resources and wildlife, while providing various recreational facilities
and services. These activities are directly controlled by the Board of Park Commissioners through the
budgetary process. The District provides no financial benefit to or burden on the County.
Cuyahoga County Arts and Culture District (the District) The District receives its funding from a voted
thirty-cent tax upon a pack of cigarettes. The tax was approved in November 2006 and was effective February
2007 for period of ten years. The District is responsible for granting the tax proceeds to support the operating
or capital expenses of arts or cultural organizations. The District is a legally separate organization that began
operating in 2007. The County does appoint the voting majority of the Board of the District but is not able to
impose its will. The District provides no financial benefit to or burden on the County.
Cuyahoga County Land Bank (the Land Bank) The Land Bank receives its funding from interest and
penalty on current delinquent property taxes which is used for its operations and to pay for principal and
interest on debt issued by the Land Bank. The Land Bank also receives grant monies to operate. The Land
Bank was created to demolish condemned structures and maintain the property on abandoned parcels. The
land is held until it can be used for productive purposes. The Land Bank is a legally separate nonprofit
corporation that began operating in 2009. While the County can appoint a voting majority of the Board,
certain members are subject to approval of the majority of the chief executive officers of all municipal
corporations. The County is therefore not able to impose its will, and the Land Bank provides no financial
benefit to or burden on the County.
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Cuyahoga Community College (the College) The Cuyahoga County Executive appoints the majority of the
nine member Board (six Trustees with the remaining three being appointed by the Governor). The College is
an institution of higher education and is legally separate and fiscally independent of other State and local
governments. The College provides no financial benefit to or burden on the County.
Note 24 - Jointly Governed Organizations
Northeast Ohio Areawide Coordinating Agency
Northeast Ohio Areawide Coordinating Agency (NOACA) was created by the County Commissioners of
Cuyahoga, Lake, Lorain and Medina Counties and is responsible for transportation and environmental
planning in the five county region. NOACA is controlled by 37 members including the three County
Commissioners. The board exercises total control over the operation of the corporation including budgeting,
appropriating, contracting and designating management. Each participant's degree of control is limited to its
representation on the board. In 2011, the County contributed $30,014, which represents .52 percent of total
contributions.
North East Ohio Network (N.E.O.N.)
N.E.O.N. is a council of governments formed to provide a regional effort in administering, managing and
operating programs for certain individuals with developmental disabilities. Participating counties include
Cuyahoga, Ashland, Columbiana, Geauga, Lorain, Lake, Mahoning, Medina, Portage, Richland, Stark,
Summit, Trumbull and Wayne Counties. N.E.O.N.’s operation is controlled by their board, which is
comprised of the superintendents of the Board of Developmental Disabilities of each participating county.
N.E.O.N. adopts its own budget, authorized expenditures and hires and fires its own staff. During 2011,
N.E.O.N. received sufficient revenues from state grant monies and no additional funds were needed from
Cuyahoga County.
Gateway Economic Development Corporation of Greater Cleveland (Gateway)
In 1990, the County, the City of Cleveland and Gateway Economic Development Corporation of Greater
Cleveland (Gateway) entered into a three party agreement which authorized Gateway to construct, own and
provide for the operation of a sports facility which included a baseball stadium, an arena and a joint
development site. Gateway was incorporated on May 31, 1990 and is a not-for-profit corporation legally
separate from any other entity. The five-member board consists of two members appointed by the City, two
members appointed by the County Executive and one by the President of the County Council with
concurrence of the Mayor of the City of Cleveland.
The County and Gateway also entered into a revolving loan agreement whereby the County agreed to issue
bonds and loan the bond proceeds to Gateway to pay arena construction costs. As part of this agreement, the
County issued taxable Economic Development Revenue Bonds of $75 million on September 24, 1992 and
$45 million on February 1, 1994. In February 2004, the County refinanced the 1992 variable rate Gateway
Economic Development Bonds. In 2010, the County refinanced the 1994 Gateway Economic Development
Bonds and the variable rate 2004B Gateway Arena Project Series Refunding Bonds.
The County, Gateway and Positively Cleveland (formerly the Convention and Visitors Bureau of Greater
Cleveland) entered into a cooperative agreement on September 15, 1992, which included a provision that
allowed a credit to be given to Gateway for the incremental amount Positively Cleveland receives from the
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County Transient Occupancy Tax to use as payment to the County for the bonds issued. This agreement was
amended on December 22, 1998 to redefine the annual incremental credit and to provide for the deposit by
Positively Cleveland for the years 1994 through 1998. The County received $1 million from this agreement
during the year ended December 31, 1999. The County received $.2 million during each subsequent year,
until 2008 when it increased to $1.4 million, subject to certain adjustments.
The County currently guarantees the repayment of $12.2 million of bonded debt of Gateway. This amount
represents the outstanding par amount of Stadium Revenue Bonds, the original outstanding amount of which
was $31 million. As of December 31, 2011, the outstanding balance on this Gateway bond guarantee,
including future interest payments, was $10 million (payable through September 15, 2014). The County has
not been required to make any payments on behalf of the Gateway bonds. In September 2004, Gateway
refinanced the Stadium Revenue Bonds.
Although the County believes that the revenue sources that secure the repayment of the revenue bonds the
County has guaranteed will be adequate to provide for the future debt service requirements under the bonds, if
Gateway was to become insolvent, the impact on the County’s future financial condition and operations
cannot presently be determined because of uncertainties regarding the amount of Gateway’s future operational
cash needs and the extent (if any) of the County’s funding of such needs.
Western Reserve Area Agency on Aging (Area Agency)
Area Agency is responsible for planning, coordinating and administering state and federal funded programs
and services for older adults. It is one of twelve regional area agencies on aging designated by the Ohio
Department of Aging as authorized by the federal Older Americans Act. The eighteen-member board consists
of four members appointed by Cuyahoga County, one member apiece appointed by the Counties of Geauga,
Medina, Lake and Lorain and ten at large appointees. The board exercises total control over the operation of
the corporation including budgeting, appropriating, contracting and designating management. Each
participant's degree of control is limited to its representation on the board.
Cleveland-Cuyahoga County Port Authority (Port Authority)
The Port Authority was created under the Ohio Revised Code. The Port Authority conducts port operations
and economic development activities. The nine-member Board of Directors consists of three appointed by the
Cuyahoga County Executive and six appointed by the City of Cleveland. The board exercises total control
over the operation of the corporation including budgeting, appropriating, contracting and designating
management. Each participant's degree of control is limited to its representation on the board.
Greater Cleveland Regional Transit Authority (Authority)
The Authority is an independent, special purpose political subdivision of the State of Ohio with powers
derived from Sections 306.30 through 306.71 of the Ohio Revised Code. The Authority has territorial
boundaries and jurisdiction coextensive with the territorial boundaries of Cuyahoga County. The Authority
was created on December 30, 1974, by ordinance of the Council of the City of Cleveland and by resolution of
the Board of County Commissioners of Cuyahoga County, and became operational on September 5, 1975.
Under Ohio law, the Authority is authorized to levy a sales and use tax for transit purposes, including both
capital improvement and operating expenses upon approval by a majority of the electorate residing within the
territorial boundaries of the Authority. On July 22, 1975, the voters of the County approved a 1 percent sales
and use tax with no limit on its duration. The Authority is managed by a ten-member Board of Trustees and
provides directly, or under contract, virtually all mass transportation within the County. Of its ten member
board, four of the members are appointed by the Mayor of the City of Cleveland with the consent of City
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Council; three members, one of whom must reside in the City of Cleveland, are appointed by the County
Executive; the remaining three members are elected by an association of suburban mayors, city managers, and
township trustees. None of the participating governments appoints a majority of the Authority’s board and
none has an ongoing financial interest or responsibility. None of the participating governments provided any
significant financial transactions with the Authority during 2011. Each participant's degree of control is
limited to its representation on the board.
Northeast Ohio Regional Sewer District (District)
The District, a political subdivision of the State of Ohio, was created by Order of the Cuyahoga County Court
of Common Pleas and commenced operations on July 18, 1972, under statutory provisions of the Ohio Revised
Code. The District provides wastewater treatment and interceptor sewer facilities for the region comprised of
the City of Cleveland and 61 suburban communities. The District is governed by its Board of Trustees. The
Board consists of seven members - each of whom serves a five-year term - who are appointed as follows: (i)
two by the Mayor of the City of Cleveland; (ii) two by council of governments (the "Suburban Council")
comprised of representatives of all the suburban communities served by the system; (iii) one by the Cuyahoga
County Executive; (iv) one by the appointing authority of the sub-district with the greatest sewage flow
(currently the Mayor of the City of Cleveland); (v) and one by the appointing authority of the sub-district with
the greatest population (currently the Suburban Council). Accordingly, the Mayor of the City of Cleveland
and Suburban Council each currently appoint three members of the Board. The annual budget is submitted to
Cuyahoga County for informational purposes only and does not require its approval. Each participant's degree
of control is limited to its representation on the board.
Note 25 – Subsequent Event
Property Tax Levy
On March 6, 2012, the County passed a 4.8 mill operating levy, designated for health and human services.
The levy is for four years.
Conduit Debt Issuances
On July 10, 2012, Resolution #2012-0113, a resolution authorizing the issuance of not-to-exceed $21,000,000
County of Cuyahoga, Ohio, Health Care Facilities Mortgage Revenue Bonds, Series 2012 (Menorah Park
Center for Senior Living – Wiggins Place Project), for the purpose of (1) refunding the outstanding principal
amount of Series 2003 Revenue Bonds that were issued to provide funds to assist Menorah Park Center for
Senior Living in financing costs of Wiggins Place and (2) providing funds to make improvements and
expansions to Wiggins Place; authorizing the execution and delivery of a base lease, a lease, a trust indenture
and an assignment to secure and provide for the payment of the bonds; authorizing the execution and delivery
of certain other documents and actions in connection with the issuance of such bonds.
On July 24, 2012, Resolution #2012-0147, a resolution amending resolution No. R2011-0257, which
authorized the issuance and sale of self-supporting housing revenue bonds in the amount not-to-exceed
$5,000,000 for Helen S. Brown Apartments, L.P. for the purpose of rehabilitating, improving and equipping a
senior housing facility for low and moderate income seniors; and declaring the necessity that this resolution
become immediately effective.
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County Debt Issuances
On October 23, 2012, Resolution #2012-0196, a resolution providing for the issuance of not-to-exceed
$15,100,000 County of Cuyahoga, Ohio, Economic Development Refunding Revenue Bonds (University
School project), in two or more series, for the purpose of refunding the remaining outstanding principal
amount of the $15,845,000 County of Cuyahoga, Ohio, Economic Development Refunding Revenue Bonds,
Series 2009 (University School project), which were issued to provide funds to assist University School in the
refinancing of costs of a “Project” within the meaning of Chapter 165, Ohio Revised Code; authorizing the
execution and delivery of a loan agreement pertaining to the project and a trust indenture securing the
payment of the Bonds; authorizing execution and delivery of a bond purchase agreement and authorizing the
execution and delivery of certain other documents and actions in connection with the issuance of such Bonds;
and declaring the necessity that this resolution become immediately effective.
On October 23, 2012, Resolution #2012-0201, a resolution providing for the issuance and sale of bonds in a
maximum aggregate principal amount of $39,721,000 to provide funds to pay costs of constructing, adding to,
remodeling, renovating, rehabilitating, furnishing, equipping and otherwise improving buildings, facilities and
structures for County offices and functions, and improving and equipping sites for such buildings, facilities
and structures, in each case together with all necessary appurtenances and work incidental thereto; and
declaring the necessity that this Resolution become immediately effective.
maximum aggregate principal amount of $21,350,000 to provide funds to pay costs of constructing, adding to,
remodeling, renovating, rehabilitating, furnishing, equipping and otherwise improving County jail,
correctional and juvenile detention facilities and improving sites for those facilities, in each case together with
all necessary appurtenance and work incidental thereto; and declaring the necessity that this Resolution
become immediately effective.
maximum aggregate principal amount of $1,205,000 to provide funds to pay costs of acquiring radios and
other communications equipment, together with all necessary appurtenances, for use in carrying out functions
of the sheriff's department; and declaring the necessity that this Resolution become immediately effective.
maximum aggregate principal amount of $880,000 to provide funds to pay costs of improving the County
fairgrounds by acquiring, constructing and installing a wind turbine and related equipment to provide electric
power to the fairgrounds; and declaring the necessity that this Resolution become immediately effective.
maximum aggregate principal amount of $847,000 to provide funds to pay costs of reconstructing, resurfacing
and otherwise improving and equipping runways at the County airport, together with necessary appurtenances
and work incidental thereto; and declaring the necessity that this Resolution become immediately effective.
maximum aggregate principal amount of $36,925,000 to advance refund at a lower interest cost all or a
portion of the $36,925,000 of the County's outstanding County building and facilities bonds, series 2004, that
are stated to mature on December 1 in each of the years from 2015 through 2024, all of which were issued as
a part of a consolidated issue of capital improvement bonds, series 2004, dated as September 15, 2004, to pay
costs of acquiring, constructing, adding to, remodeling, renovating, rehabilitating, furnishing, equipping and
otherwise improving buildings, facilities and structures for County offices and functions, and acquiring,
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improving and equipping sites for such buildings, facilities and structures, in each case together with all
necessary appurtenances and work incidental thereto; and declaring the necessity that this Resolution become
immediately effective.
maximum aggregate principal amount of $8,975,000 to advance refund at a lower interest cost all or a portion
of the $8,975,000 of the County's outstanding County correctional and detention facilities improvement
bonds, series 2004, that are stated to mature on December 1 in each of the years from 2015 through 2022, all
of which were issued as a part of a consolidated issue of capital improvement bonds, series 2004, dated as of
September 15, 2004, to pay costs of acquiring, constructing, adding to, remodeling, renovating, rehabilitating,
furnishing, equipping and otherwise improving County jail, correctional and juvenile detention facilities and
acquiring and improving sites for those facilities, in each case together with all necessary appurtenances and
work incidental thereto; and declaring the necessity that this Resolution become immediately effective.
maximum aggregate principal amount of $1,065,000 to advance refund at a lower interest cost all or a portion
of the $1,065,000 of the County's outstanding capital improvement bonds, series 2004 (Orange Place
Extension Project), that are stated to mature on December 1 in each of the years from 2015 through 2024, all
September 15, 2004, to provide funds to pay the County's portion of the cost of improving Orange Place, in
cooperation with the Village of Orange Village, by grading, draining, curbing, paving and constructing
sidewalks, storm and sanitary sewers and water lines, in each case together with the necessary appurtenances
and work incidental thereto; and declaring the necessity that this Resolution become immediately effective.
maximum aggregate principal amount of $440,000 to advance refund at a lower interest cost all or a portion
of the $440,000 of the County's outstanding sewer district improvement bonds, series 2004 (County
Improvement No. 1460, Phase I), that are stated to mature on December 1 in each of the years from 2015
through 2022, all of which were issued as a part of a consolidated issue of capital improvement bonds, series
2004, dated as of September 15, 2004, to provide funds, in anticipation of the collection of special
assessments theretofore levied, to pay the property owners' portion of the cost of constructing County
Improvement No. 1460, Phase I, being water lines in five roads in County Sewer District No. 14 in Olmsted
Township; and declaring the necessity that this Resolution become immediately effective.
maximum aggregate principal amount of $90,000 to advance refund at a lower interest cost all or a portion of
the $90,000 of the County's outstanding sewer district improvement bonds, series 2004 (County Improvement
No. 1460, Phase II), that are stated to mature on December 1 in each of the years from 2015 through 2024, all
September 15, 2004, to provide funds, in anticipation of the collection of special assessments theretofore
levied, to pay the property owners' portion of the cost of constructing County Improvement No. 1460, Phase
II, a 12-inch waterline and appurtenances in Sharp Road from Sprague Road to Schady Road, in County
Sewer District No. 14 in Olmsted Township; and declaring the necessity that this Resolution become
immediately effective.
maximum aggregate principal amount of $110,000 to advance refund at a lower interest cost all or a portion
of the $110,000 of the County's outstanding sewer district improvement bonds, series 2004 (County Water
Improvement No. 2300), that are stated to mature on December 1 in each of the years from 2015 through
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2022, all of which were issued as a part of a consolidated issue of capital improvement bonds, series 2004,
dated as of September 15, 2004, to provide funds, in anticipation of the collection of special assessments
theretofore levied, to pay the property owners' portion of the cost of constructing County Water Improvement
No. 2300 in County Sewer District No. 23 in Chagrin Falls Township; and declaring the necessity that this
Resolution become immediately effective.
maximum aggregate principal amount of $2,020,000 to provide funds for the County's contribution to the
acquisition and equipping of the Village of Highland Hills municipal building, and the renovation and
construction and reconstruction of improvements thereto, including necessary appurtenances thereto, which
building is to be used jointly by the Village and the County as a community center for governmental and civic
purposes in accordance with a cooperative agreement between the Village and the County; and declaring the
necessity that this Resolution become immediately effective.
Note 26 - The MetroHealth System (Dollars in Thousands)
Significant Accounting Policies
Reporting Entity The MetroHealth System (the System) is the public health care system for Cuyahoga
County, Ohio (the County). The financial statements include the MetroHealth Medical Center, a short-term
acute care and long-term rehabilitation facility; Broadway Medical Offices, Buckeye Health Center and
MetroHealth outpatient community health facilities; MetroHealth Centers for Skilled Nursing Care, consisting
of the Old Brooklyn Nursing Facility and the Elisabeth Severance Prentiss Center for Skilled Nursing Care;
and several urban and suburban primary care health sites. All significant inter-entity transactions have been
eliminated in the financial statements.
The Old Brooklyn Nursing Facility was closed effective December 14, 2011. The bed licenses are still held
by the System and the building will be converted for use as a rehabilitation facility.
The System is organized and operated by its board of county hospital trustees (the Board) pursuant to Chapter
339 of the Ohio Revised Code. Until 2010, members of the Board were jointly appointed by the Board of
County Commissioners of the County, and the senior judges of the Probate and Common Pleas Courts of the
County. Effective January 2011, the County voters have established a new form of government by charter
(the Charter). Under the Charter, future members of the Board will be appointed by the senior judges of the
Probate and Common Pleas Courts of the County and the County Executive, as provided by law.
Discretely Presented Component Unit The component unit column in the entity-wide financial statements
identifies the financial data of the System’s component unit, the Metrohealth Foundation, Inc. (Foundation).
Metrohealth Foundation, Inc. The Metrohealth Foundation, Inc. (the “Foundation”) is a legally
separate entity. The Foundation is a not-for-profit organization supporting the System. The
Foundation acts primarily as a fundraising organization to supplement the resources that are available
to the System in support of its programs. Although the System does not control the timing or the
amount of receipts from the Foundation, the majority of resources, or income thereon, which the
Foundation holds and invests, is restricted to support the System. Because these restricted resources
held by the Foundation can only be used by, or for the benefit of the System, it is considered a
component unit of the System. Complete financial statements of the Foundation can be obtained by
writing to the MetroHealth Foundation, 2500 MetroHealth Drive, Cleveland, Ohio 44109.
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In addition, MHS Holdings LLC is presented as a blended entity component unit whose financial activity is
included with the activities of the System.
Basis of Accounting The System is accounted for as a proprietary fund (enterprise fund) using the flow of
economic resources measurement focus and the accrual basis of accounting. With this measurement focus, all
assets and all liabilities associated with the operation of the System are included on the statement of net assets.
Revenue is recognized in the period in which it is earned and expenses are recognized in the period in which
incurred.
Use of Estimates The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements. Estimates also affect the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Net Patient Service Revenue Net patient service revenue is reported at the estimated net realizable amounts
from patients, third-party payors, and others for services rendered, including estimated retroactive adjustments
under reimbursement agreements with third-party payors, estimated allowances for uncollectible accounts and
uncompensated care allowances. Retroactive adjustments are accrued on an estimated basis in the period the
related services are rendered and adjusted in future periods, as final settlements are determined. Net patient
service revenue is reported net of contractual and retroactive adjustments of $1,067,316 and provisions for
uncollectible accounts of $84,269 in 2011.
The System has agreements with third-party payors that provide for payment at amounts different from
established charge rates. A summary of the basis of payment by major third-party payors follows:
Medicare and Medicaid Inpatient acute care services rendered to Medicare and Medicaid program
beneficiaries and Medicare capital costs are paid at prospectively determined rates-per-discharge. These rates
vary according to a patient classification system that is based on clinical, diagnostic, and other factors. As an
academic medical center, medical education payments in addition to disproportionate share entitlements are
received from Medicare and Medicaid. Medicare utilizes a prospective payment system for inpatient
rehabilitation services and psychiatric services. Effective October 1, 2010, the System no longer participates
in the Medicare Periodic Interim Payment (PIP) system.
Medicare outpatient claims are reimbursed under the Ambulatory Payment Classification based prospective
payment system. The payments are based on patient assessment date classifying patients into one of the
Medicare Ambulatory Payment Classifications. Inpatient rehabilitation and psychiatric and services are
reimbursed at a prospectively determined per diem rate. Certain outpatient services related to Medicare
beneficiaries and capital costs for Medicaid beneficiaries are reimbursed based on a cost-based methodology
subject to certain limitations. The System is reimbursed for cost reimbursable items at tentative rates with
final settlement determined after submission of annual cost reports by the System and audits thereof by the
Medicare and Medicaid fiscal intermediaries. The System’s classification of patients under the Medicare and
Medicaid programs and the appropriateness of their admission are subject to an independent review.
Differences between the estimated amounts accrued at interim and final settlements are reported in the
statement of activities in the year of settlement. The System recorded a favorable adjustment of $3,991 in
2011 due to prior year retroactive adjustments to amounts previously estimated and changes in estimates.
Net revenue from the Medicare and Medicaid programs accounted for approximately 26 percent and 28
percent, respectively, of the System’s net patient service revenue for the year ended December 31, 2011. Laws
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and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation.
Compliance with such laws and regulations can be subject to future government review and interpretation as
well as significant regulatory action including fines, penalties and exclusion from the Medicare and Medicaid
programs. As a result, there is at least a reasonable possibility that recorded estimates could change by a
material amount in the near term. Management believes that adequate provision has been made in the
financial statements for any adjustments that may result from final settlements.
Centers for Medicare and Medicaid Services Recovery Audit Contractor Program Congress passed the
Medicare Modernization Act in 2003, which among other things established a three-year demonstration of the
Medicare Recovery Audit Contractor (RAC) program. The RAC’s identified and corrected a significant
amount of improper overpayments to providers. In 2006, Congress passed the Tax Relief and Health Care Act
of 2006 which authorized the expansion of the RAC program to all 50 states by 2010. The Centers for
Medicare and Medicaid Services (CMS) is in the process of rolling out this program nationally.
Other payors The System has also entered into payment agreements with certain commercial insurance
carriers, health maintenance organizations and preferred provider organizations. The basis for payment under
these agreements includes prospectively-determined rates-per-discharge, discounts from established charges
and prospectively-determined per diem rates.
Upper payment limit In September 2001, the State of Ohio Supplemental Upper Payment Limit program for
Public Systems (UPL) was approved by the CMS. This program provides access to available federal funding
up to 100 percent of the Medicare upper payment limits for inpatient hospital services rendered by Ohio Public
Hospitals to Ohio Medicaid consumers. The State of Ohio fiscal year 2010/2011 budget also included an
expansion of the UPL program to outpatient services for the first time. The System received $2,367 in
outpatient UPL payments in 2011. At December 31, 2011, $12,496 was due to the System and recorded on the
statement of net assets in other receivables. The net amount recorded in net patient service revenue for UPL
by the System was $27,130 and in 2011. The State of Ohio discontinued the Program’s required contributing
match for participants as of June 30, 2009. Effective July 1, 2009, the State began assessing a franchise fee to
hospitals to fund healthcare programs, including the UPL program. The System incurred a franchise fee
expense of $7,363 in 2011 and recorded the amounts as program expenses in the statement of activities. The
System’s franchise fee liability payable to the State of Ohio at December 31, 2011 was $2,379 and is recorded
on the statement of net assets in other liabilities.
Disproportionate share As a public health care provider, the System renders services to residents of the
County and others regardless of ability to pay. The System is classified as a disproportionate share provider
by the Medicare and Medicaid programs due to the volume of low-income patients it serves. Accordingly, the
System receives additional payments from these programs as a result of this status totaling $42,203 in 2011
(including Hospital Care Assurance (HCAP) of $26,747) which are included in net patient service revenue.
HCAP amounts are presented net of amounts received and assessments paid by the System. The System
received $30,206 and paid $3,459 in 2011. The System also provides major trauma services to the region.
The ability to continue these levels of service and programs is contingent upon the various continued funding
sources.
Charity Care Throughout the admission, billing and collection processes, certain patients are identified by the
System as qualifying for charity care. The System provides care to these patients without charge or at amounts
less than its established rates. The charges foregone for charity care provided by the System, totaling
$242,823, which represents 12 percent of gross charges in 2011, are not reported as revenue. The System
accepts certain indigent Ohio residents and all residents from the County regardless of their ability to pay.
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Grants The System receives financial assistance from federal and state agencies in the United States in the
form of grants. The expenditure of funds received under these programs generally requires compliance with
terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies.
Other such audits could be undertaken by federal and state granting agencies and result in the disallowance of
claims and expenditures; however, in the opinion of management, any such disallowed claims or expenditures
will not have a material effect on the overall financial position of the System.
Pooled Cash and Cash Equivalents The System only considers cash in its commercial checking accounts as
“equity in pooled cash and cash equivalents.” Funds in the System’s savings/money market accounts are
considered “investments.” Cash and cash equivalents are stated at cost which is equivalent to fair value.
Supplies Medical supplies are stated at the lower of cost or market value on a first-in first-out basis.
Pharmaceutical supplies are stated at the lower of cost or market on a first-in first-out basis.
Investments Unrealized gains and losses on investments are included in net investment income in the
statement of activities.
The System pools certain of its investments for investment purposes. Investment income for these pooled
investments is allocated to the proper investment classification based on each investment’s fair value to the
total fair value of all pooled investments.
The net realized (loss) gain on investments of ($172) in 2011 is the difference between the proceeds received
and the amortized cost of investments sold and is included in net investment income (loss) in the statement of
activities.
Restricted Assets Restricted assets are cash and cash equivalents and investments whose use is limited by
legal requirements. Investments under bond indenture agreements represent amounts required by debt
instruments to pay bond principal and interest and approved projects. Restricted cash and cash equivalents and
special purpose investments represent monies received from donors or grantors to be used for specific
purposes, primarily research. The System has elected to use restricted assets before unrestricted assets when an
expense is incurred for a purpose for which both resources are available.
Fundraising Revenues Gifts, grants and program income result from fundraising activities of the Foundation.
Though donations are solicited for the Foundation, donors occasionally make their gifts directly to the System.
Contributions The Foundation recognizes contributions as revenue in the period in which the pledge (promise
to give) is received. The Foundation recognizes donated services as contributions if the services (a) create or
enhance non-financial assets or (b) require specialized skills, are performed by people with those skills, and
would otherwise be purchased by the Foundation.
Annuity Payment Obligations The Foundation has entered into gift annuity agreements which include
provisions requiring the Foundation to pay periodic fixed payments to beneficiaries during their lifetimes.
Charitable gift annuities differ from other charitable giving options in that the annuity is a general obligation
of the Foundation. Accordingly, if the assets of the gift are exhausted as a result of required payments to
beneficiaries, unrestricted assets of the Foundation will be utilized to fund future payments.
Income Taxes The Foundation is an Ohio nonprofit corporation and was granted tax-exempt status under
Section 501(c)(3) of the Internal Revenue Code and is exempt from income tax on related income pursuant to
Section 501(a) of the Code. The Foundation is required to pay taxes on unrelated business income earned by
the Foundation.
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Capital Assets Capital assets are stated at cost and contributed capital assets are stated at their fair value at the
date of contribution. Expenditures for equipment must exceed $1 per unit and expenditures for renovations
must exceed $10 in order from them to be capitalized. Expenditures that substantially increase the useful lives
of existing assets are capitalized. Routine maintenance and repairs are expensed as incurred. Depreciation and
amortization of assets recorded under capital lease (straight-line method) are provided in amounts sufficient to
amortize the cost of the related assets over their estimated useful lives. The following are the most commonly
used estimated useful lives:
Buildings
Building Improvements
Equipment
Land Improvements
Vehicles
25 - 40 Years
5 - 20 Years
3 - 15 Years
5 - 15 Years
4 Years
The asset and accumulated depreciation are removed from the related accounts when the asset is disposed.
Any income or loss resulting from this disposal is recorded in the statement of activities.
Net Assets The System classifies its net assets into three categories as follows:
Invested In Capital Assets, Net Of Related Debt – consists of capital assets, net of accumulated
depreciation and reduced by outstanding balances for bonds and other debt that are attributable to the
acquisition, construction or improvement of those assets.
Restricted Net Assets – result when constraints placed on the net asset use are either externally
imposed by creditors, grantors, contributors and the like, or imposed by law through constitutional
provisions or enabling legislation.
Unrestricted Net Assets – consist of all other assets that do not meet the criteria above.
Bond Discounts and Bond Issuance Costs Deferred financing costs represent debt issuance expenditures on
long-term debt obligations and are amortized over the period the bonds are outstanding on a straight-line basis.
The amortization for deferred bond financing costs was $169 in 2011. Amortization expense related to bond
discounts was $104 in 2011. These amounts are included in interest expense in the statement of activities.
Accounting guidance requires amounts to be amortized utilizing the effective interest method. The difference
between the two amortization methods is immaterial to the financial statements.
Cost of Borrowing Interest costs incurred on debt during the construction or acquisition of assets capitalized
as a component of the cost of acquiring those assets. Capitalized interest of $515 was recorded in construction
in progress as opposed to interest expense for 2011. Construction in progress is transferred to capital assets
when assets are substantially completed and amortization of capitalized interest is accounted for in the same
manner as other components of assets cost and included in depreciation expense.
The System has entered into various interest-rate swap agreements. The interest-rate swap agreements are
carried at fair value in the balance sheets. These derivative instruments are not effective hedging instruments;
therefore, gains and losses are recognized in the statement of activities during the period of change as
adjustments to investment income on the related debt.
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Concentrations of Credit Risk Financial instruments that potentially subject the System to concentrations of
credit risk consist principally of cash and cash equivalents, patient accounts receivable and investments.
The system places its cash and cash equivalents with high credit quality financial institutions. The System’s
investments include money market funds, U.S. Treasury bills and notes, U.S. agency obligations, commercial
paper and corporate bonds.
Concentration of credit risk relating to patient accounts receivable is limited to some extent by the diversity
and number of the System’s patients and payors. Patient accounts receivable consist of amounts due from
government programs, commercial insurance companies, private pay patients and other group insurance
programs. Excluding governmental programs, no payor source represents more than 10 percent of the
System’s patient accounts receivable. The System maintains an allowance for losses based on the expected
collectability of patient accounts receivable.
Deposits and Investments
Deposits All monies deposited to the System’s banks or trust companies designated by the Board of Trustees.
Funds not needed for immediate expenditure may be deposited in interest bearing or non-interest bearing
accounts.
Custodial Credit Risk Custodial credit risk is the risk that, in the event of bank failure, the System’s deposits
might not be recovered. The FDIC increased insurance through December 31, 2013 for funds held in interest
bearing accounts from $100 to $250 per depositor per category of legal ownership. The System’s investment
policy does not address custodial credit risk. The System’s bank deposits at December 31, 2011 totaled
$72,326 and were subject to the following categories of custodial credit risk:
Uncollateralized
$72,029
Collateralized with securities held by the pledging
institution's trust department, but not in the System's name
Total amount subject to custodial risk
Amount insured
47
72,076
250
Total bank balances
$72,326
Investments The System’s investment policy authorizes the System to invest in the following investments:

Securities and obligations of the US Treasury and other federal agencies or instrumentalities.

Time certificates of deposit or savings accounts and deposit accounts.

Municipal and state bonds

No-loan money market mutual funds investing in items listed above.

Commercial paper that constitutes unsecured short-term debt on an entity defined in Division (D) of
Section 1705.01 of the Ohio Revised Code and matures no later than 270 days from purchase date, the
aggregate value of the commercial paper does not exceed two percent of the aggregate value of the
- 88 -
outstanding paper of the entity, the paper is rated by at least two nationally recognized standard rating
services (NRSRS) and is rated in the highest classification and the entity has assets exceeding five
hundred million dollars.

Bankers acceptances that mature no later than 180 days from purchase, the obligations are eligible for
purchase by the Federal Reserve System, the issuer has a minimum “AA” long-term debt rating by a
majority of NRSRS agencies and any single obligation will not exceed five percent of the System’s
total average portfolio.

Notes issued by corporations incorporated in the United States and operating in the United States and
the notes are rated in the second highest or higher category by at least two NRSRS at the time of
purchase, mature in two years or less from the date of purchase and cannot exceed 15 percent of the
System’s total average portfolio.

No loan money market mutual funds rated in the highest category at the time of purchase by at least
one NRSRS and consisting exclusively of obligations in the US Treasury and other federal agencies or
instrumentalities and commercial paper listed above.
Derivative instruments In previous periods, the System entered into two separate and distinct interest rate
swap agreements (“Swaps”) with two counter-parties. The Swaps have notional amounts, maturity schedules
and other features that match the System’s two series of underlying variable rate demand bonds. The Swaps
obligate the System to make fixed rate payments to the counter-parties and obligate the counter-parties to
make variable-rate payments to the System. The Swaps are accounted for as “investments” on the System’s
financial statements pursuant to GASB 53. However, the Swaps were intended, and in fact function, as risk
management instruments for current obligations of the System. Consequently, the System does not consider
them to be subject to the requirements of the System’s investment policy.
As of December 31, 2011, the fair values of the System’s investments and their ratings by Standard & poor’s
were as follows:
Investment Maturities
2011
Less than
1 year
1 - 5 years
Rating
U. S. Government Agencies
Federal National Mortgage Association and Federal
Home Loan Mortgage Corporation (Federal Pools)
Commercial Papper
Corporate Bonds
$237,323
$40,277
$197,046
AAA
62
58,177
21,341
1
58,177
21,341
61
0
0
AAA
A1
AAA
Totals
$316,903
$119,796
$197,107
Deposits totaling $69,073 are included in investments on the statement of net assets at December 31, 2011.
The System’s carrying amounts of deposits and investments at December 31, 2011 were $72,459 and
$316,903; respectively. The difference between the bank balances and financial statement carrying amounts
represent outstanding checks payable and normal reconciling items.
Interest Rate Risk The System’s investment policies limit investment portfolios to maturities of five years or
less.
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Credit Risk The collateralized mortgage obligations and federal mortgage pools are investments that were
made according to policy at the time. In the wake of the financial crisis, the nature of these investments
changed and no longer conforms to policy. However, these investments are currently illiquid and cannot be
exited at this time.
Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of the failure of the
counterparty, the System will not be able to recover the value of its investments or collateral securities that are
in the possession of an outside party. The System’s investment policy does not address custodial credit risk.
Concentration of Credit Risk Concentration of credit risk is the risk of loss attributable to the magnitude of
investments in any single issuer. The System holds 5.2 percent of its portfolio in UBS Finance Delaware CP.
The Foundation As of December 31, 2011 the fair values of the Foundation’s investments were as follows:
Mutual Funds
Common Stock
Limited Partnership Interest
Premier Purchasing Partners, L.P.
$24,505
26
1,698
956
Totals
$27,185
The Foundation's investments had cumulative unrealized gains of $604 and cumulative unrealized losses of
$1,727 at December 31, 2011.
Capital Assets
Balance
12/31/10
Additions
Reductions
Balance
12/31/11
Land
$9,314
4,386
$0
27,658
$0
(24,957)
$9,314
7,087
13,700
27,658
(24,957)
16,401
Land Improvements
Buildings and Fixed Equipment
Equipment
11,574
530,980
291,186
45
5,066
19,854
0
(39)
(11,121)
11,619
536,007
299,919
833,740
24,965
(11,160)
847,545
Land Improvements
Buildings and Fixed Equipment
Equipment
(6,921)
(344,110)
(229,952)
(421)
(16,508)
(14,599)
0
10
10,217
(7,342)
(360,608)
(234,334)
(580,983)
(31,528)
10,227
(602,284)
252,757
(6,563)
Capital Assets, Net
$266,457
$21,095
Total depreciation and amortization expense related to capital assets was $31,528.
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(933)
245,261
($25,890)
$261,662
Long-term Debt
Original issue amounts and interest rates of the County’s debt issues were as follows:
Original
Issue
Debt Issue
1997 Hospital Improvement and Refunding Revenue Bonds
1997A Hospital Refunding Revenue Bonds
2003 Hospital Improvement Revenue Bonds
2005 Hospital Improvement and Revenue Bonds
2009A Hospital Facilities Revenue Bonds
2009B Hospital Facilities Revenue Bonds
2011 Hospital Refunding Revenue Bonds
$70,000
77,525
30,545
74,535
8,466
75,000
67,455
Interest Rate
Year of
Maturity
4.6 - 5.6 %
4.1 - 5.5
Variable
Variable
3.9
8.2
3.2
2027
2019
2033
2035
2014
2040
2019
Changes in the System's long-term obligations during the year ended December 31, 2011, consist of the
following:
Outstanding
12/31/10
Additions
Reductions
Outstanding
12/31/11
Amounts
Due in
One Year
Revenue Bonds
1997 Hospital Improvement and Refunding
1997A Hospital Refunding
2003 Hospital Improvement
2005 Hospital Improvement
2009A Hospital Facilities
2009B Hospital Facilities
2011 Hospital Refunding
Unamortized discount and loss on refunding
$30,155
60,605
26,185
72,880
7,683
75,000
0
(9,211)
$0
0
0
0
0
0
67,455
(816)
$12,555
54,875
725
375
7,683
0
0
(888)
$17,600
5,730
25,460
72,505
0
75,000
67,455
(9,139)
$0
5,730
750
390
0
0
8,635
0
Total Revenue Bonds
263,297
66,639
75,325
254,611
15,505
Other Long-Term Obligations
Loan Obligation - Cuyahoga County
Sanitary Engineering
Capital Lease
44
903
0
0
4
274
40
629
5
262
947
0
278
669
267
$264,244
$66,639
$75,603
$255,280
$15,772
Total
Effective February 1, 1997, Cuyahoga County, acting by and through the Board of Trustees of The
MetroHealth System, issued $70,000 of System Improvement and Refunding Revenue Bonds Series 1997
(The MetroHealth System Project) (Series 1997). The proceeds of the Series 1997 Bonds were used to refund
$20,900 of Series 1989 Bonds; to finance the construction of various improvements and additions to The
MetroHealth Medical Center; and to pay costs of issuance of the Series 1997 Bonds. On November 22, 2011,
the entire principal amounts of the Series 1997 Bonds maturing in years 2012 through 2019 were refunded
with proceeds from the County’s Series 2011 Hospital Refunding Revenue Bonds. The refunding totaled
$11,440.
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Effective November 1, 1997, Cuyahoga County, acting by and through the Board of Trustees of The
MetroHealth System, issued $77,525 of Hospital Refunding Revenue Bonds, Series 1997A (The MetroHealth
System Project) (Series 1997A). On February 15, 1998, the proceeds of the Series 1997A Bonds were used to
refund the entire $73,725 remaining outstanding balance of the Series 1989 Bonds. The 1997 refunding
resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $9,753.
The unamortized difference, $7 at December 31, 2011 is reported in the accompanying financial statements as
a reduction from long-term debt and is included as additional interest expense through the year 2012. On
November 22, 2011, all outstanding Series 1997A principal amounts maturing on and after February 15, 2012
were refunded or advance refunded using proceeds from the County’s Series 2011 Hospital Refunding
Revenue Bonds. The Bond refunding totaled $55,170 of which $49,440 was immediately refunded and
$5,730 was advance refunded for February 2012.
Effective March 13, 2003, Cuyahoga County, acting by and through the Board of Trustees of The
MetroHealth System, issued $30,545 of Hospital Improvement Variable Rate Demand Revenue Bonds, Series
2003 (The MetroHealth System Project) (Series 2003 Bonds). The proceeds of the Series 2003 Bonds were
used to pay costs of constructing and equipping the Critical Care Pavilion and an administrative building.
The bonds bear interest at a variable rate (not to exceed 10.0 percent) determined weekly as established by the
Remarketing Agent based on current market values for similar bond offerings and are due at various dates
until 2033. The interest rate at December 31, 2011 was 0.07 percent.
In connection with the issuance of the Series 2003 Bonds, the System entered into a Reimbursement
Agreement with a bank. Under the terms of the Reimbursement Agreement, the System entered into an
Irrevocable Letter of Credit issued by a local bank that expired on March 22, 2010. Effective March 1, 2010,
the System entered into a new letter of credit reimbursement agreement (“2003 Letter of Credit”) that expires
on March 16, 2013.
In the event there is a remarketing drawing on the letter of credit and the tendered bonds have not been
remarketed by the 367th day from the Remarketing Drawing, the System has the option to convert the
obligation to a term loan in the amount of the unpaid portion of the remarketing drawing. The term loan is
payable in twelve equal quarterly installments accruing interest at the base rate plus 1 percent. The base rate
is defined as the highest of the Prime Rate, the sum of the Federal Funds rate plus .50 percent or the sum of
the daily Libor Rate plus 1 percent. In the event of default, the term loan will be due immediately upon
demand by the Bank.
Commencing June 16, 2010, the System is required to pay the Bank a letter of credit fee payable in quarterly
installments at variable rates ranging from 95 basis points to 175 basis points depending on the debt rating in
effect as of the date the rating report is released. In addition, the System paid to the Bank a closing fee of 20
basis points and to the Remarketing Agent an advisory fee of 7.5 basis points. As of December 31, 2011 the
letter of credit fee was 95 basis points. There were no amounts outstanding on the letter of credit as of
December 31, 2011.
The 2003 Letter of Credit is subject to various financial covenants for debt service coverage, long-term debt
to capitalization, cash to debt and short-term debt to earnings before interest, taxes, depreciation and
amortization.
Effective July 1, 2005, Cuyahoga County, acting by and through the Board of Trustees of The MetroHealth
System, issued $74,535 of Hospital Improvement and Refunding Variable Rate Demand Revenue Bonds,
Series 2005 (The MetroHealth System Project) (Series 2005 Bonds). Proceeds from the 2005 Series Bonds
were used to advance refund $56,995 of the outstanding Series 1999 Bonds to pay costs of constructing,
renovating, furnishing, equipping, and improving the Old Brooklyn Campus long-term care and skilled
- 92 -
nursing facility; and to pay certain costs of issuance of the Series 2005 Bonds. The bonds bear interest at a
variable rate (not to exceed 10.0 percent) determined weekly as established by the Remarketing Agent based
on current market values for similar bond offerings and are due at various dates until 2035. The interest rate
at December 31, 2011 was 0.07 percent.
In connection with the issuance of the Series 2005 Bonds, the System entered into a Reimbursement
Agreement with a bank. Under the terms of the Reimbursement Agreement, the System entered into an
Irrevocable Letter of Credit issued by a local bank that expires on July 16, 2010. Effective June 1, 2010, the
System entered into a new letter of credit reimbursement agreement ("2005 Letter of Credit") that expires on
July 16, 2013 with PNC bank (as Administrative Agent) and JPMorgan Chase Bank (collectively referred to
as the “Banks”), and PNC Capital Markets as Lead Arranger and Book Runner.
In the event there is a remarketing drawing on the letter of credit and the tendered bonds have not been
remarketed by the 367th day from the Remarketing Drawing, the System has the option to convert the
obligation to a term loan in the amount of the unpaid portion of the remarketing drawing. The term loan is
payable in twelve equal quarterly installments accruing interest at the base rate plus 2 percent. The base rate
is defined as the highest of the Prime Rate, the sum of the Federal Funds Open rate plus .50 percent, the sum
of the daily Libor Rate plus 1 percent, or 5 percent per annum. In the event of default, the term loan will be
due immediately upon demand by the Banks.
Commencing July 16, 2010, the System is required to pay the Banks a letter of credit fee payable in quarterly
installments at variable rates ranging from 105 basis points to 185 basis points depending on the debt rating in
effect as of the date the rating report is released. In addition, the System paid to the Banks a closing fee of 15
basis points (and an additional $10 to the Agent Bank), and to the Lead Arranger an arrangement fee of $75.
As of December 31, 2011, the letter of credit fee was 95 basis points, respectively. There were no amounts
outstanding on the letters of credit as of December 31, 2011.
The 2005 Letter of Credit is subject to various financial covenants for debt service coverage, long-term debt
to capitalization, cash to debt and short-term debt to earnings before interest, taxes, depreciation and
amortization.
The July 28, 2005, bond refunding resulted in a difference between the reacquisition price and the net
carrying amount of the old debt of $5,179. The unamortized difference ($3,764 at December 31, 2011),
reported in the accompanying financial statements, as a reduction from long-term debt, is being amortized as
an increase to interest expense through the year 2029.
Effective December 1, 2009, Cuyahoga County, acting by and through the Board of Trustees of The
MetroHealth System, issued $8,466 of Hospital Facilities Revenue Bonds, Series 2009A. The proceeds of the
Series 2009A Bonds were used to purchase the Valentine parking garage on the System’s main campus. The
Bonds carried an interest rate of 3.9 percent and were to mature through 2014. On November 22, 2011, all
outstanding Series 2009A Bonds totaling $7,076 were refunded from proceeds of the County’s Series 2011
Hospital Refunding Revenue Bonds.
Effective January 28, 2010, Cuyahoga County, acting by and through the Board of Trustees of The
MetroHealth System, issued $75,000 of Hospital Revenue Bonds, Taxable Series 2009B, (The MetroHealth
System), (Build America Bonds – Direct Payment). Proceeds from the Series 2009B will be used to pay for
costs of hospital facilities, including three medical helicopters, the acquisition, construction and equipping of
additional multi-specialty ambulatory centers in strategic locations, and additional scheduled equipment
purchases and facilities renovations; funding the Bond Reserve Fund for the Series 2009B Bonds; and certain
bond issuance costs. The Bonds bear interest at a fixed rate of 8.223 percent per annum and mature at various
- 93 -
dates through 2040. As a qualified Build America Bond Issue, per terms of the federal government’s
American Recovery and Reinvestment Act of 2009, the System will apply to receive direct payments
semiannually from the Secretary of the United States Treasury in the amount of 35 percent of the
corresponding bond interest paid. Payments received from the Treasury are recorded in other non-operating
revenue.
Effective November 8, 2011, Cuyahoga County, acting by and through the Board of Trustees of The
MetroHealth System, issued $67,455 of Hospital Refunding Revenue Bonds, Series 2011, (The MetroHealth
System), (Taxable Bonds). Proceeds from the Series 2011 Bonds were used to currently refund the entire
principal amount of the Series 1997 Bonds maturing on February 15, 2012 through February 15, 2019;
currently refund the outstanding principal amount of the Series 1997A Bonds maturing on and after February
15, 2013; advance refund the principal amount of the Series 1997A Bonds maturing February 15, 2012;
currently refund all the outstanding Series 2009A Bonds; and pay certain costs of issuance of the Series 2011
Bonds. The Bonds bear interest at a fixed rate of 3.16 percent per annum and mature at various dates through
2019.
The November 8, 2011 bond refunding resulted in a difference between the reacquisition price and the net
carrying amount of the old debt of $5,187. The unamortized difference ($5,098 at December 31, 2011) is
reported in the accompanying financial statements as a reduction from long-term debt and is being amortized
as an increase to interest expense through the year 2019.
The Series 1997, 1997A, 1999, 2003, 2005, 2009A, 2009B and 2011 Bonds were issued pursuant to a master
trust bond indenture agreement between the County, acting by and through the System’s Board of Trustees,
and the bond trustee. The Series 1997, 1997A, 1999, 2003, 2005, 2009B and 2011 Bonds are special
obligations issued by the County payable solely from the revenue derived from the operation of the System
and other monies available to the System’s Board of Trustees. Accordingly, the bond proceeds and
indebtedness have been recorded as assets and liabilities of the System.
The terms of the master trust bond indenture agreement provide for the establishment of a depreciation
reserve fund and maintenance of certain special funds, which are maintained under the control of the bond
trustee, and are used for payment of principal and interest on the bonds when due.
The revenue bonds and lease obligation payment requirements for fiscal years subsequent to December 31,
2011, are as follows:
Capital Lease & Loan
Principal
Interest
Revenue Bonds
Principal
Interest
2012
2013
2014
2015
2016
2017-2021
2022-2026
2027-2031
2032-2036
2037-2040
$267
298
80
6
6
12
0
0
0
0
$15
8
1
1
1
1
0
0
0
0
$15,505
8,825
9,115
9,415
9,725
46,060
43,355
40,635
40,570
40,545
$11,272
11,314
11,036
10,750
10,454
47,644
40,673
33,247
23,790
6,889
Total
$669
$27
$263,750
$207,069
The cost value of Hospital Revenue Bonds was $263,480 at December 31, 2011.
- 94 -
There are no amounts remaining to be paid to bond holders related to defeased debt at December 31, 2011.
Other Long-Term Liabilities
Other long-term liabilities consist of the following at December 31, 2011:
Balance at
12/31/10
Additions
Deletions
Balance at
12/31/11
Due within
One Year
Amounts due to third-party payors
Accrued vacation and sick leave
Derivative instruments - rate swaps
$10,769
39,900
3,421
$1,439
42,300
11,932
($3,340)
(41,762)
0
$8,868
40,438
15,353
$5,029
7,419
0
Totals
$54,090
$55,671
($45,102)
$64,659
$12,448
Amounts Due to Third-Party Payors The System has agreements with third-party payors that provide for
payment of amounts different from established rates. Retroactive adjustments are considered in the
recognition of revenue on an estimated basis in the period the related services are rendered and are adjusted in
future periods, as final settlements are determined. See net patient service revenue for additional information.
Accrued Vacation and Sick Leave System employees earn vacation and sick leave at varying rates
depending on job classification and years of service. Employees can accumulate up to three years of their
earned vacation leave. All accumulated, unused vacation time is paid upon separation if the employee has at
least one year of service with the System. There is no limit on the amount of sick time earned. Upon
retirement, employees with a minimum of 10 years of service have sick leave balances paid out at 50 percent
of eligible hours at their current rate of pay. The maximum payout is 800 hours.
Derivative Instruments The System’s objectives of its derivative instruments include managing the risk of
increased debt service resulting from rising market interest rates, the risk of decreased surplus returns
resulting from falling interest rates, and the management of the risk of an increase in the fair value of
outstanding fixed rate obligations resulting from declining market interest rates. Consistent with its interest
rate risk management objectives, the System entered into various interest rate swap agreements with a total
outstanding notional amount of $97,965 at December 31, 2011.
The System’s swap agreements do not meet the criteria for hedging and are reported as investment derivative
instruments. The fair value of the swap agreements based on current settlement prices at December 31, 2011
was ($15,353). The amounts due to the counterparties are included within long-term liabilities. The fair
value decrease of $11,932 in 2011 is included in net investment income (loss) in the statement of activities.
As a result of the agreements, net settlements increased the System’s interest expense by $2,121 in 2011.
The following table describes the terms of the System’s two interest rate swap agreements:
Notional Amount
Effective Date
Termination Date
Early Termination Option
The System Pays
Counterparty Pays*
July 28, 2005
Swap Agreement
March 13, 2003
Swap Agreement
$72,505
July 28, 2005
February 1, 2035
the System
Fixed 3.3%
64.2%
$25,460
March 13, 2003
March 1, 2033
the System
Fixed 3.5%
68.9%
* of ISDA 5 Year Swap Rate
- 95 -
On July 28, 2005, the System entered into a swap agreement (the Original Agreement) with an initial
amortizing notional amount of $74,535. The notional amount is based on the Series 2005 Bond principal
repayment schedule that ends in 2035. Per the terms of an amended agreement effective June 1, 2006, the
System pays a fixed rate of 3.3 percent and the counterparty pays 64.2 percent of the International Swaps and
Derivatives Association, Inc. (ISDA) USD five-year swap rate. The original agreement previously required
the counterparty to pay 70 percent of the 3-month USD LIBOR. In 2011, ISDA five-year interest rates
ranged between 1.1 percent and 2.6 percent. The net amount is exchanged monthly between the two parties.
The System has an early termination option.
On March 13, 2003, the System entered into a swap agreement (the Original Agreement) with an amortizing
notional amount of $30,545. The amortizing notional amount is based on the Series 2003 Bond principal
repayment schedule ending on March 1, 2033. Per terms of an amended agreement effective June 1, 2006,
the System pays a fixed rate of 3.5 percent and the counterparty pays 68.9 percent of the ISDA USD five-year
swap rate. The original agreement required the counterparty to pay 75 percent of the 3-month USD LIBOR
rate. Net settlement amounts are exchanged monthly. The System has an early termination option.
Interest Rate Risk The System is exposed to interest rate risk on its interest rate swaps. On the pay-fixed
receive variable swaps, as the ISDA Swap index decreases, the System’s net payment on the swaps increase.
Risk Management The System is exposed to various risks of loss related to torts; theft of or destruction of
assets; errors and omissions; injuries to employees; and natural disasters. The System is self-insured for
employee health insurance, workers’ compensation and medical malpractice but maintains commercial
insurance policies for property and casualty, automobile, aircraft (helicopter and fixed wing) as well as excess
coverage for medical malpractice claims. Settled claims for workers’ compensation and medical malpractice
have not exceeded insurance coverage in any of the past three years.
During the normal course of its operations, the System has become a defendant in various legal actions. In
the opinion of legal counsel and the System administration, the disposition of the pending cases will not have
a material adverse effect of the financial condition or operations of the System. However, depending on the
amount and timing of such resolution, an unfavorable resolution of some or all of these matters could
materially affect the System’s future results of operations or cash flows in a particular year.
The System is self-insured for employee health insurance, medical malpractice and workers’ compensation
claims. For the professional and patient care liability, professional actuarial insurance consultants have been
retained to determine funding requirements. Amounts funded for professional and patient care have been
placed in an irrevocable self-insurance trust account, which is being administered by a trustee. For the
employee health insurance, a historical analysis has been performed of incurred but not reported claims to
determine the liability at December 31, 2011.
Losses from asserted claims and from unasserted claims identified under the System’s incident reporting
systems are accrued based on estimates that incorporate the Systems’ past experience as well as other
considerations including the nature of each claim or incident and relevant trend factors. The liability for
estimated self-insured claims includes estimates of the ultimate costs for both reported claims and claims
incurred but not report for 2011 and 2010 as follows:
- 96 -
Workers’ Compensation
Beginning
Balance
Claims
Incurred
Claims
Paid
Ending
Balance
Due Within
One Year
2010
$8,473
$3,285
($3,034)
$8,724
$3,348
2011
8,724
2,823
(2,671)
8,876
3,055
Self-Insurance
Beginning
Balance
Claims
Incurred
Claims
Paid
Ending
Balance
Due Within
One Year
2010
$30,003
$10,310
($11,717)
$28,596
$8,606
2011
28,596
15,488
(5,705)
38,379
12,200
Employee Health Insurance
Beginning
Balance
Claims
Incurred
Claims
Paid
Ending
Balance
Due Within
One Year
2010
$1,513
$15,837
($15,833)
$1,517
$1,517
2011
1,517
17,484
(17,465)
1,536
1,536
The current portion of employee health insurance liabilities is included in other current liabilities.
The liabilities recorded for workers’ compensation and self-insurance at December 31, 2011 are discounted
liabilities. The discount rate used was 1.5 percent. The undiscounted liabilities are approximately $600 and
$2,100 higher for workers’ compensation and self-insurance, respectively.
Operating Leases
The System has entered into operating lease agreements for a parking facility, medical space and office space
which expires through 2020. Contract terms range between one and fifteen years and contain rent escalation
clauses and renewal options for additional periods ranging from one to five years. Rent expense totaled
$2,104 in 2011. Minimum rental commitments under operating leases extending beyond one year at
December 31, 2011 are as follows:
2012
2013
2014
2015
2016
2017 - 2020
Total
$1,968
1,564
921
607
610
1,776
$7,446
- 97 -
Benefit Plans
Pension Like the primary government, the System participates in the Ohio Public Employees Retirement
System (OPERS). See Note 13 for additional information on OPERS.
The System’s required contributions to OPERS for the years ended December 31, 2011, 2010, and 2009 were
$52,482, $49,988 and $48,406, respectively, equal to the required contributions for each year.
Postemployment Benefits The System’s required contributions to OPERS for 2011, 2010 and 2009 used to
fund postemployment healthcare benefits were $14,994, $18,149 and $20313, respectively, which are
included in the System’s contractually required contribution of $52,482, $49,988 and $48,406 for the years
ended December 31, 2011, 2010, and 2009. See Note 14 for additional information on OPERS
postemployment benefits.
Restricted Net Assets, Expendable and Nonexpendable
The System has expendable restricted net assets which have been restricted by the master trust bond indenture
and donors to a specific purpose. The Foundation has expendable restricted net assets which have been
restricted by the donors or grantors to a specific time or purpose. These net assets are designated for the
following purposes at December 31:
System
Foundation
Total
Debt service payment and reserve funds
Programmatic activities of The MetroHealth System
Time restrictions
$25,542
0
5,854
$0
16,933
188
$25,542
16,933
6,042
Total
$31,396
$17,121
$48,517
The Foundation has restricted net assets, nonexpendable, of $8,998 at December 31, 2011, that is restricted in
perpetuity, the income from which is expendable to support the programmatic activities of The MetroHealth
System.
Related Transactions
The System received support from the Foundation in the amount of $3,933 in 2011 which is recorded as grant
revenue on the System’s statement of activities. The outstanding receivable from the Foundation was $1,581.
The System provided the Foundation in-kind support totaling $1,367. This support covered the direct
expenses of the Development Department and indirect expenses for the use of space and support departments
such as information services and environmental services.
The System has established restricted funds to differentiate resources, the use of which is restricted by donors
or grantors, from resources of general funds on which donors place no restrictions or that arise as a result of
the operations of the System. A review of these restricted funds is performed annually to determine that
funds, related to completed clinical trials and certain donated money, should be transferred to the Foundation.
There were no transfers in 2011.
Investment in Blended Component Unit
MHS Holdings LLC (LLC) was formed to acquire and own interests in certain health care businesses. The
System is the 99 percent member of the LLC. During 2011, the System’s 40 percent equity interest in
- 98 -
CCF/MHS Renal Care Company, LTD., joint venture with The Cleveland Clinic Foundation, which provides
renal care (dialysis), was transferred to the LLC. Because the LLC is considered to be a blended equity
component unit of the System, its financial activity is reflected within the financial activity of the System on
these financial statements. In 2011, the System has reflected $6,633 in other assets on the statement of net
assets and $5,113 in other income on statement of activities related to the activity of the LLC, which
essentially represents the LLC’s interest in CCF/MHS Renal Care Company, LTD. In addition, prior to the
establishment of the LLC, the System received $2,548 in distributions from CCD/MHS renal Care Company,
LTD. in 2011.
Conditional Promises to Give
The Foundation received a conditional pledge of $10,000 commencing in 2005 payable over the next ten
years at $1,000 per year. The outstanding balance of $3,415 at December 31, 2011 is not included in these
financial statements in accordance with the Accounting Standards Codifications (ASC) 958, “Not for Profit
Entities” due to the fact that the conditions of the grant have not been met.
Commitments and Contingencies
As of December 31, 2011, the System had contractual commitments for the construction of various projects
totaling approximately $10,948. Projects with large contractual commitments include $1,318 for the
replacement of MetroHealth Drive, $891 for elevator modernization, $755 for parking garage improvements
and $629 for the Neurosurgery renovations. These projects are being funded with operating funds and bond
project funds.
Regulatory environment including fraud and abuse matters The health care industry is subject to numerous
laws and regulations of federal, state and local governments. These laws and regulations include, but are not
necessarily limited to, matters such as licensure, accreditation, government health care program participation
requirements, reimbursements for patient services and Medicare and Medicaid fraud and abuse. Government
activity continues with respect to investigations and allegations concerning possible violations of fraud and
abuse statutes and regulations by health care providers. Violations of these laws and regulations could result
in expulsion from government health care programs together with the imposition of significant fines and
penalties, as well as significant repayments for patient services previously billed. Management believes that
the System is in compliance with fraud and abuse, as well as other applicable government laws and
regulations. While no regulatory inquires have been made compliance with such laws and regulations can be
subject to future government review and interpretation, as well as regulatory actions unknown or asserted at
this time.
Patient Protection and Affordable Care Reconciliation Act On March 23, 2010, the most sweeping health
care legislation since the advent of Medicare was signed into law. The law promises to expand insurance
coverage to an additional 32 million Americans, reduce the growth of Medicare expenditures, dramatically
reform insurance markets and continue the trend toward value-based payment. The Reconciliation Act
amends various provisions of the Patient Protection and Affordable Care Reconciliation Act and adds some
new provisions that were not included originally. Several legal challenges have been made against the
legislation since it was enacted, and uncertainty exists as to the ultimate impact of the legislation on the health
care delivery system. Potential impacts of health care reform include uncertainty and volatility in Medicare
and Medicaid reimbursement, fundamental changes in payment systems, increased regulation and significant
required investments in health care information technology.
- 99 -
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100
CUYAHOGA COUNTY, OHIO
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Federal Grantor/Pass-Through Grantor/Program Title
U.S. DEPARTMENT OF AGRICULTURE
Passed Through the Ohio Department of Education:
Child Nutrition Cluster:
Non-Cash Assistance (Food Distribution):
National School Lunch Program
Non-Cash Assistance Subtotal
Cash Assistance:
National School Lunch Program
School Breakfast Program
Cash Assistance Subtotal
Total Child Nutrition Cluster
Passed Through the Ohio Department of Job and Family Services:
State Administrative Matching Grants for Supplemental Nutrition Assistance Program
Total U.S. Department of Agriculture
U.S. DEPARTMENT OF EDUCATION
Direct Program
2010/2011 Improvement of education program
Passed Through the Ohio Department of Education:
Special Education Cluster:
Special Education--Grants to States (IDEA, Part B):
CCBDD FY 2011 TITLE VI-B School Age Grant
CCBDD FY 2012 TITLE VI-B School Age Grant
Special Education-Grants to State (IDEA, Part B), Recovery Act:
ARRA - CCBDD FY 2010 William B Day Early Child Ctr., Recovery Act
Special Education--Preschool Grants (IDEA Preschool):
CCBDD FY 2011 Title VI-B Preschool Grant
ARRA - FY 2011 Early Childhood Special Education, Recovery Act
Total Special Education Cluster
Passed Through the Ohio Department of Rehabilitation Services
Rehabilitation Services - Vocational Rehabilitation Grants to States:
Vocational Rehabilitation Public & Private Partnerships (VRP3) Program
VRP3 Supportive Emloyment (CSC)
VRP3 Call Center Program (CSC)
VRP3 Business Enterprise Center (CSC)
Pathways II Vocational Program
Statewide Pathways II Vocational Program
Pathways II Cooperative Project
Total CFDA # 84.126
Passed Through the Ohio Department of Health:
Early Intervention Services (IDEA) Cluster:
Special Education - Grants for Infants and Families:
Help Me Grow
ARRA - Special Education - Grants for Infants and Families, Recovery Act:
ARRA - Ohio Dept. of Health - Help Me Grow, Recovery Act
Total Early Intervention Services (IDEA) Cluster
Total U.S. Department of Education
U.S. DEPARTMENT OF ENERGY
Passed Through the Ohio Department of Development:
Weatherization Assistance for Low-Income Persons:
Home Weatherization Assistance Program 2008
ARRA - Weatherization Assistance for Low-Income Persons 2009-2010, Recovery Act
Total CFDA # 81.042
Energy Efficiency and Conservation Block Grant Program:
Fairgrounds Wind Turbine Project
ARRA-Energy Conservation Measures, Recovery Act
ARRA-EECBG Block Grant, Recovery Act
Total CFDA # 81.128
Total U.S. Department of Energy
See accompanying notes to this Schedule
101
Federal
CFDA
Number
Pass-Through
Grantor Number
10.555
N/A
10.555
10.553
N/A
N/A
10.561 G-1011-11-5026 / G-1213-11-0026
Grant
Expenditures
$
20,280
20,280
535,586
304,220
839,806
860,086
16,683,727
17,543,813
84.215
U215K100112
81,118
84.027
84.027
066563-6BSF-11
066563-6BSF-12
264,243
149,436
84.391
ARRA-066563-CC-2011
249,048
84.173
84.392
066563-PG-S1-2012
ARRA-066563-PGS1-2011
9,252
1,025
673,004
84.126
84.126
84.126
84.126
84.126
84.126
84.126
N/A
N/A
N/A
N/A
OAKS ID#102206/33
18-001B-VOCRHB-T-11-11110
N/A
465,324
542,362
204,355
67,858
418,883
277,445
881,714
2,857,941
84.181
N/A
1,411,907
84.393
018-0021-HA-0110
926,071
2,337,978
5,950,041
81.042
81.042
81.042
81.042
H-05-109
H-09-109
H-11-110
ARRA-10-109
2,027
4,473
94,499
4,301,815
4,402,814
81.128
81.128
81.128
09EE004049
DE-EE0000708
DE-EE0000708
455,549
1,507,302
196,521
2,159,372
6,562,186
Federal
CFDA
Number
Pass-Through
Grantor Number
66.469
EPA-R5-GL-2010-1
138,215
66.818
66.818
66.818
66.818
66.818
66.818
BP-985744-01-0
623945391
00E63701-0
BF-00E64101-01-0
BF-00E95801-0
2B-0097301-0
22,436
699,585
31,588
811,640
524,433
681,287
2,770,969
2,909,184
93.086
90FE00520-01
93.243
93.243
1H79TI023086-01
TI 17560-01
Child Support Enforcement Research:
Financial Well-being Demonstration
93.564
90FD0155 / 01
Voting Access for Individuals with Disabilities -Grants to States:
US HHS HAVA Grant
93.617
N/A
Low-Income Home Energy Assistance:
HWAP — HHS Administration 2007
ARRA - HWAP ARRA 2009-2010, Recovery Act
Total CFDA # 93.568
93.568
93.568
93.568
93.568
93.568
H-05-109
H-05-109
H-09-109
H-11-110
ARRA-10-109
HIV Emergency Relief Project Grants:
HIV Emergency Relief P.C. Support 07/08
Minority Aids Initiative Program
Minority Aids Initiative Program
Total CFDA # 93.914
93.914
93.914
93.914
93.914
93.914
93.914
5-H89-HA-00045-08
6H89HA00045-14-01
2H89HA00045-15-00
2H89HA00045-16-00
1H3MHA08469-01-00
1H3MHA08459-AO-00
(57)
2,190
1,538,151
2,276,880
8,705
142,898
3,968,767
93.652
90CO103401
354,749
U.S. ENVIRONMENTAL PROTECTION AGENCY
Direct Programs:
Great Lakes Program:
Great Lakes Restoration
Brownfields Assessment and Cleanup Cooperative Agreements:
CPC Brownfield Fund
Brownfield RFL Co-Op Agreement
2008 EPA
US EPA 2008 BROWNFIELD RLF
2009 EPA Coalition assessment Grant
ARRA - US EPA 2010 ARRA Supplemental, Recovery Act
Total CFDA # 66.818
Total U.S. Environmental Protection Agency
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Direct Programs:
Healthy Marriage Promotion and Responsible Fatherhood Grants:
National Fatherhood Initiative
Substance Abuse and Mental Health Services - Projects of Regional
and National Significance:
CPC Felony Drug Court
Fed Family Drug Court — SAMHSA
Total CFDA # 93.243
Adoption Opportunities Grant
Grant
Expenditures
426,478
92,694
(585)
92,109
119,831
145
(190)
(6,050)
3,993
63
99,860
97,676
Promoting Safe and Stable Families
93.556 G-1011-11-5026 / G-1213-11-0026
1,176,368
Temporary Assistance for Needy Families (TANF) State Programs
Child Support Enforcement (Title IV-D):
Program Funding
Child Support Performance Incentives
Total CFDA # 93.563
93.558 G-1011-11-5026 / G-1213-11-0026
26,120,308
93.563 G-1011-11-5026 / G-1213-11-0026
93.563 G-1011-11-5026 / G-1213-11-0026
18,542,173
2,691,486
21,233,659
Refugee and Entrant Assistance - State Administered Programs
93.566 G-1011-11-5026 / G-1213-11-0026
380,405
93.645 G-1011-11-5026 / G-1213-11-0026
93.645 G-1011-11-5026 / G-1213-11-0026
605,056
111,334
716,390
93.575 G-1011-11-5026 / G-1213-11-0026
93.596 G-1011-11-5026 / G-1213-11-0026
627,357
2,265,253
2,892,610
Child Welfare Services - State Grants (Title IV-B):
Title IV-B Allocation
Regional Training Centers
Total CFDA # 93.645
CCDF Cluster:
Child Care Development Block Grant
Child Care Mandatory and Matching Funds of the Child Care and Development Fund
Total CCDF Cluster
102
Federal
CFDA
Number
Pass-Through
Grantor Number
93.658
93.658
93.658
93.658
G-1011-11-5026 / G-1213-11-0026
G-1011-11-5026 / G-1213-11-0026
G-1011-11-5026 / G-1213-11-0026
G-1011-11-5026 / G-1213-11-0026
3,632,672
19,206,393
129,483
505,679
23,474,227
Adoption Assistance (Title IV-E): Administrative and Training
Adoption Assistance (Title IV-E): Regional Training Centers
Adoption Assistance (Title IV-E) Direct contract costs
Total CFDA # 93.659
93.659 G-1011-11-5026 / G-1213-11-0026
93.659 G-1011-11-5026 / G-1213-11-0026
93.659 G-1011-11-5026 / G-1213-11-0026
18,370,470
123,594
505,680
18,999,744
Social Services Block Grant (Title XX)
93.667 G-1011-11-5026 / G-1213-11-0026
24,716,857
Child Abuse and Prevention Month
93.590 G-1011-11-5026 / G-1213-11-0026
1,999
Chafee Foster Care Independence Program
93.674 G-1011-11-5026 / G-1213-11-0026
415,335
Child Support Enforcement Research
93.564 G-1011-11-5026 / G-1213-11-0026
166,147
Children's Justice Grants to States
93.643 G-1011-11-5026 / G-1213-11-0026
3,280
Medical Assistance Program - Medicaid
Medical Assistance Program (Child Welfare Related)- Medicaid
Total CFDA # 93.778
93.778 G-1011-11-5026 / G-1213-11-0026
93.778 G-1011-11-5026 / G-1213-11-0026
9,259,352
230,790
9,490,142
Grant
Expenditures
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES (Continued)
Passed Through the Ohio Department of Job and Family Services:(Continued)
Foster Care (Title IV-E) Administrative and Training
Foster Care (Title IV-E) Foster Care Maintenance (FCM) and Purchased Administration
Foster Care (Title IV-E) Regional Training Centers
Foster Care (Title IV-E) Direct contract costs
Total CFDA # 93.658
Title IV-E Administration Juvenile Court
93.658
75-5-1545
93.667
MH12
1,131,470
Medical Assistance Program — Title XIX
ARRA - Medical Assistance Program ARRA— Title XIX, Recovery Act Funded
Total CFDA # 93.778
93.778
93.778
N/A
N/A
88,284,869
3,763,323
92,048,192
Block Grants for Community Mental Health Services
93.958
MH12
96.009
N/A
7,670
ARRA - Medical Assistance Program — Title XIX — TCM, Recovery Act Funded
ARRA - Medical Assistance Program — Day Rehabilitation, Recovery Act Funded
Medical Assistance Program — Waiver Administration
Home Care Waiver Program
Total CFDA # 93.778
93.778
93.778
93.778
93.778
N/A
N/A
N/A
N/A
198,225
1,226,763
9,651,922
82,839
11,159,749
93.667
MR-18-01
93.275
99-E66F-ATR-T-09-0836
93.959
93.959
93.959
93.959
93.959
93.959
93.959
93.959
93.959
93.959
93.959
93.959
93.959
93.959
93.959
93.959
93.959
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
18-10342-TASC-O-11-9196
18-10342-TASC-O-11-9196
18-02962-TASC-T-05-9196
18-02962-TASC-T-07-9196
18-10342-TASC-T-08-9196
18-10342-TASC-T-10-9196
18-10342-TASC-O-11-9196
Passed Through Ohio Department of Mental Health Services:
Passed Through the Ohio Department of Mental Retardation and Development Disabilities
Social Security State Grants for Work Incentives Assistance to Disabled Beneficiaries:
Ticket to Work Program
Passed Through the Ohio Department of Alcohol and Drug Addiction Services
Substance Abuse and Mental Health Services - Access To Recovery
Block Grants For Prevention and Treatment of Substance Abuse:
Health Block Grant (Per Capita)
UMADOP
Women’s 15%
Yment
TASC
Community Prevention
Project Safe (new HIV)/OUTREACH
Drug Free Community Coalition
Youth Services DYS Aftercare
Youth-Led Prevention
TASC FY 11
TASC FY 12
TASC FY O5
TASC FY O7
TASC FY O8
TASC FY O10
TASC FY O11
Total
103
668,603
816,927
937,028
5,000
6,773,868
497,205
1,643,505
164,811
164,643
143,089
99,613
80,077
255,021
15,363
335,685
233,222
(11,021)
23,976
54
8,313
(2,218)
10,425,206
Federal
CFDA
Number
Pass-Through
Grantor Number
93.778
93.778
N/A
N/A
8,836,175
400,154
9,236,329
261,283,400
96.001
N/A
79,683
96.002
N/A
177,241
Grant
Expenditures
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES (Continued)
Passed Through the Ohio Department of Alcohol and Drug Addiction Services (Continued)
Medical Assistance Program — Title XIX
ARRA - Medical Assistance Program ARRA — Title XIX, Recovery Act Funded
Total CFDA # 93.778
Total U.S. Department of Health and Human Services
SOCIAL SECURITY ADMINISTRATION
Social Security - Disability Insurance
Social Security - Retirement Insurance
Total Social Security Administration
256,924
U.S. DEPARTMENT OF HOMELAND SECURITY
Direct Programs:
Port Security Grant Program FY 08/09
Port Security Grant Program FY 10/13
Total CFDA # 97.056
Passed Through the Ohio Department of Public Safety:
Disaster Grants - Public Assistance (Presidentally Declared Disasters):
Fema Hurricane Katrina Public Assistance
Emergency Management Performance Grants:
Emergency Management
Passed Through the Ohio Department of Emergency
Management Assistance:
Interoperable Emergency Communications FY 2008
Interoperable Emergency Communications FY 2009
Total CFDA # 97.055
Homeland Security Grant Program:
State SHSP-Law Enforcement (SHSPLE) 2008
State SHSP-Law Enforcement (SHSPLE) 2009
SHSP Exercise FY2008
Urban Area Secruity Initiative (URSI)
Community Emergency Response Team Grant
Community Emergency Response Team Grant
Law Enforce Terrorism Prevention Program
Total Homeland Security Grant Program
Total U.S. Department of Homeland Security
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Direct Programs:
CDBG - Entitlement Grants Cluster:
CDBG Rehab Operations FY 08
2008 Neighborhood Stabilization Program
2011 NSP 3 Admin
CDBG YR 35 2009
CDBG YR 36 2010
CDBG YR 37 2011
CDBG Program Loans (FY 2011 Beg Bal Loan Rec)
ARRA - 2009 CDBG ARRA Entitlement Grants (CDBG-R), Recovery Act Funded
Total CDBG - Entitlement Grants Cluster
CDBG / State's Program and Non-Entitlement Grants:
2009 STATE NSP PROJECT PLAN
Emergency Shelter Grants Program (ESG) 2010
Emergency Shelter Grants Program (ESG) 2011
Total CFDA # 14.231
104
97.056
97.056
2008-GB-T8-K107
2010-PU-T0-K018
97.036
3250-EM-035-05C44
97.042
34-6000.817
231,246
97.055
97.055
2008-IO-T8-0044
2009-IP-T9-0016
112,534
116,449
228,983
97.067
97.067
97.067
97.067
97.067
97.067
97.067
97.067
97.067
97.067
97.067
2008-GE-T8-0025
2009-SS-T9-0089
2008-HSGEP-08-002
2006-TU-T6-0051
2007-GE-T7-0030
2008-GE-T8-0030
2009-SS-T9-0089
2010-SS-TO-0012
2008-GE-T8-0025
2009-SS-T9-0089
2007-GE-T7-0030
901,712
5,031
4,242
(2,795)
265,833
3,231,304
406,513
115,802
1,045,160
336,088
935,911
7,244,801
8,014,893
14.218
14.218
14.218
14.218
14.218
14.218
14.218
14.253
B-08-UC-39-0001
B-08-UC-39-0002
B-11-UN-39-0002
B-09-UC-39-0001
B-10-UC-39-0001
B-11-UC-39-0001
14.228
B-Z-08-246-1
152,845
14.231
14.231
S-10-UC-39-0001
S-11-UC-39-0001
170,514
3,274
173,788
B-09-UY-39-0001
281,070
26,473
307,543
2,320
38,274
3,941,270
6,468
474,959
1,945,878
2,286,004
13,137,807
48,377
21,879,037
Federal
CFDA
Number
Pass-Through
Grantor Number
14.235
14.235
14.235
14.235
14.235
14.235
OH16B70-2030
OH0053B5E020801
OH0073B5E020802
OH0070B5EO20802
OH0070B5EO21003
OH0052B5E020801
51,426
527,499
155,502
187,118
172,265
265,549
1,359,359
14.238
14.238
14.238
14.238
14.238
14.238
14.238
14.238
14.238
OH16C50-2001
OH16C50-2003
OH16C60-2001
OH0058C5E020801
OH0278C5E020901
OH16C70-2001
OH0035C5E020800
OH0310C5E020900
OH0060C5E020802
690,461
33,226
468,969
2,274
251,358
381,929
245,372
118,531
10,893,321
13,085,441
14.239
14.239
14.239
14.239
14.239
14.239
14.239
14.239
M-05-DC-39-0216
M-03-DC-39-0216
M-07-DC-39-0216
M-08-DC-39-0216
M-09-DC-39-0216
M-10-DC-39-0216
M-11-DC-39-0216
115,000
196,970
181,056
424,615
638,590
1,502,116
727,724
11,575,659
15,361,730
CDBG / Brownfields Economic Development Iniiative:
HUD Section 108
14.246
B-94-UC-39-0001
638,920
Neighborhood Stabilization (NSP2 - Admin):
2010 NSP2 admin
14.256
B-09-CN-OH-0032
3,317,874
ARRA - Homelessness Prevention and Rapid Re-Housing Program, Recovery Act Funded 14.257
S-09-UY-39-0001
576,980
623945391
623945391
117,601
(3,879)
113,722
Grant
Expenditures
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (Continued)
Direct Programs: (Continued)
Supportive Housing Program:
SHP-'07- DOMESTIC VIOLENCE CENTER
SHP '08 SA Pass Transitional
SHP '09 -SA ZELMA GEORGE
SHP-09 HEP
SHP-10 HEP
SHP -08-PASS Supportive
Total CFDA # 14.235
Shelter Plus Care 2005 — SRA
Shelter Plus Care 2005 — TRA
Shelter Plus Care 2006 - SRA
Shelter & Care '08 Renewal -SRA
Shelter+ Care '09 Renewal -SRA
Shelter+ Care '07 - SRA
Shelter+ Care '08 - SRA
Shelter & Care '09 - SRA (6yr)
Shelter & care '09 renewal - SRA
Total CFDA # 14.238
Home Investment Partnerships Program (HOME):
Home 2005
Home ADM Operations 2006
Home 2007
Home 2008
Home 2009
Home 2010
Home 2011
Home Program Loans (FY 2011 Beg Bal Loans Receivable)
Total CFDA # 14.239
Lead-Based Paint Hazard Control in Privately-Owned Housing
2007 Lead Hazard Reduction
2007 Lead Hazard Control
Total CFDA # 14.900
14.900
14.900
Passed Through the State of Ohio:
B-A-09-246-1
1,410,271
Passed Through the City of Cleveland:
S-09-MY-39-0004
3,504,624
Passed Through the City of Cleveland Heights:
S-09-MY-39-0005
319,546
14.901
OHLHD0218-10
13,869
14.905
OHLHD0218-10
212,230
62,120,236
Passed through the Cuyahoga County Board of Health:
2011 Healthy Homes Initiative Grants
Passed through the Cuyahoga County Board of Health:
2011 Lead Hazard Reduction Demonstration Grant
Total U.S. Department of Housing and Urban Development
105
Federal
CFDA
Number
Pass-Through
Grantor Number
16.560
16.560
2009-DN-BX-K254
2009-NB-BX-08AO
378,070
7,212
385,282
Drug Court Discretionary Grant Program:
Juvenile Drug Court Enhancement - OJJDP
16.585
2005-DC-BX-0060
(32,681)
Residential Substance Abuse Treatment for State Prisoners:
ADAMHSBCC OCJS - RSAT Residential Correction Program
16.593
2010-RS-SAT-132
41,500
Bulletproof Vest Partnership Program
16.607
N/A
44,723
Reduction and Prevention of Children's Exposure to Violence:
Child Exposed to Violence Demo PHSI
16.730
2010-MU-MUK-001
143,244
ARRA - Internet Crimes against Children Task Force Program (ICAC),
Recovery Act Funded:
ARRA - Recovery Act ICAC Task Force FY09
16.800
2009-SN-B9-K029
125,811
Supervised Visitation, Safe Havens for Children:
Safe Havens: SVSE 2007
16.527
2006-CW-AX-0001
2,830
Grants to Encourage Arrest Policies and Enforcement of Protection Orders Program:
Family Justice Center Project - 09/2011
16.590
2009-WE-AX-0043
321,351
DNA Backlog Reduction Program
DNA Backlog Reduction Program
Total CFDA # 16.741
16.741
16.741
2009-DN-BX-K090
2010-DN-BX-K073
15,915
28,431
44,346
Paul Coverdell Forensic Sciences Improvement Grant Program
16.742
2010-PC-NFS-7807
65,428
Missing Children's Assistance:
Internet Crimes Against Children FY 09
Internet Crimes Against Children FY 11-12
Total CFDA # 16.543
16.543
16.543
2009-MC-CX-K032
2011-MC-CX-K026
368,293
22,040
390,333
State Criminal Alien Assistance Program (SCAAP)
16.606
N/A
46,948
Edward Byrne Memorial Justice Assistance Grant Program:
JAG Asst Justice 07
JAG Asst Justice 08
JAG Asst Justice 09-13
Total CFDA # 16.738
16.738
16.738
16.738
2007-DJ-BX-1355
2008-DJ-BX-0287
2010-DJ-BX-0251
1
19,333
17,133
36,467
Congressionally Recommended Awards:
Cuyahoga County Fatherhood Initiative
Prisoner Reentry Program - FY 2011
Total CFDA # 16.753
16.753
16.753
2010-DD-BX-0405
2010-DD-BX-042
295,101
367,382
662,483
Second Chance Act Prisoner Reentry Initiative:
Modified Therapeutic & Intensive Case Management
Project Restore Program 2010/2011
Total CFDA # 16.812
16.812
16.812
2010-RW-BX-0010
2010-CZ-BX-0113
134,077
82,147
216,224
16.575
2011-ADSCE471
59,875
16.738
2006-JG-E01-6562
16.803
16.803
2009-RA-01-2153
2009-RA-CO1-2147
U.S. DEPARTMENT OF JUSTICE:
Direct Programs:
National Institute of Justice Research, Evaluation, and Development Project Grants:
Cold cases using DNA (2010/2011)
Northern Border Initiative CY 2010
Total CFDA # 16.560
Passed Through Ohio Office of Justice Assistance:
Crime Victim Assistance:
Voca Children Who Witness Violence 2011
Passed Through the Ohio Department of Public Safety:
Edward Byrne Memorial Justice Assistance Grant Program:
Cuyahoga Regional TEW
ARRA - Edward Byrne Memorial Justice Assistance Grant (JAG) Program,
ARRA-S. Tubbs Jones Drug Court 09/10
ARRA-Apprenticeship Grant 09/10
Total JAG Program Cluster
106
Grant
Expenditures
671
136,281
7,603
144,555
Federal
CFDA
Number
Pass-Through
Grantor Number
ARRA - Edward Byrne Memorial Competitive Grant Program, Recovery Act Funded
ARRA-Recovery Act Reducing Mortgage Fraud
ARRA-Recovery Act Drug Court Grant FY 2011
ARRA-ODADAS STJ Drug Court Expansion
ARRA-Recovery Act Drug Court Grant FY 2011
Total CFDA # 16.808
16.808
16.808
16.808
16.808
2009-SC-B9-0080
9910342-ARRA-T111101
091B01-ARRA-T111122
9910342-ARRA-T111101
26
(10,264)
96,734
33,567
120,063
Juvenile Justice and Delinquency Prevention Allocation to States:
JJDP Block Grant FY 2009
JJDP Block Grant FY 2010
JJDP Block Grant FY2011
2010 Cuyahoga JJ Administration
2011 Cuyahoga JJ Administration
Total CFDA # 16.540
16.540
16.540
16.540
16.540
16.540
2008-JJ-RPU-0795
2009-JJ-RPU-0795
2010-JJ-RPU-0795
2009-JJ-ADM-0320
2010-JJ-ADM-0320
11,247
74,892
140,029
1,661
19,500
247,329
16.588
16.588
16.588
16.588
16.588
2009-WF-RPU-0768
2010-WF-RPU-0769
2009-WF-ADM-8668
2010-WF-ADM-8668
2009-AR-RPU-0768
240,004
352,530
4,549
11,486
86,643
695,212
16.523
16.523
16.523
16.523
2007-JB-01-B068
2008-JB-RPU-0700
2009-JB-RPU-0700
2010-JB-RPU-0700
3,463
100,371
129,678
151,785
385,297
16.804
2009-SC-B9-0367
352,916
4,499,536
17.258
17.258
17.258
17.258
JFSFAP10
JFSFAP10
JFSFAP11
JFSFAP11
936,815
54,100
1,296,495
58,886
2,346,296
WIA-Youth Activities (SFY 11) (1/11 - 6/11)
WIA-Youth Activities (SFY 11)-Admin (1/11 - 6/11)
WIA-Youth Activities (SFY 12) (7/11 - 12/11)
WIA-Youth Activities (SFY 12)-Admin (7/11 - 12/11)
Total WIA - Youth Activities
17.259
17.259
17.259
17.259
JFSFYP10
JFSFYP10
JFSFYP11
JFSFYP11
2,606,097
150,500
1,301,777
59,126
4,117,500
WIA-Dislocated Formula (SFY 11) (1/11 - 6/11)
WIA-Dislocated Formula (SFY 11)-Admin (1/11 - 6/11)
WIA-Dislocated Formula (SFY 12) (7/11 - 12/11)
WIA-Dislocated Formula (SFY 12)-Admin (7/11 - 12/11)
Adult Under Dislocated Worker
Rapid Response
ARRA - Rapid Response, Recovery Act Funded
ARRA - Ohio Learning Account, Recovery Act Funded
Total WIA - Dislocated Workers
Total U.S. Department of Labor
17.278
17.278
17.278
17.278
17.278
17.278
17.278
17.278
JFSFDP10
JFSFDP10
JFSFDP11
JFSFDP11
JFSFAP10
JFSFDP10,11
JFSDF09S
JFSFSW10S
(810,448)
53,555
781,785
35,508
1,737,811
765,293
1,452,115
119,114
4,134,733
10,598,529
Grant
Expenditures
U.S. DEPARTMENT OF JUSTICE: (Continued)
Passed Through the Ohio Department of Public Safety:(Continued)
Passed Through the Office of Criminal Justice Services:
Violence Against Women Formula Grants:
FY 2010 VAWA Block Grant
FY 2011 VAWA Block Grant
FY 2009 VAWA Administration
FY 2010 VAWA Administration
ARRA - FY 09 Recovery Act Stop VAWA, Recovery Act Funded
Total CFDA # 16.588
Passed Through the Ohio Department of Youth Services:
Juvenile Accountability Block Grants:
ODYS Step Down
2009 JAIBG Block Grant
Total CFDA # 16.523
Passed Through the City of Cleveland:
ARRA - Edward Byrne Memorial Justice Assistance Grant (JAG) Program,
ARRA - Recovery Act-Justice Reform 2009/2013
Total U.S. Department of Justice
U.S. DEPARTMENT OF LABOR:
WIA Cluster:
WIA-Adult Programs (SFY 11) (1/11 - 6/11)
WIA-Adult Programs (SFY 11)-Admin (1/11 - 6/11)
WIA-Adult Programs (SFY 12) (7/11 - 12/11)
WIA-Adult Programs (SFY 12)-Admin (7/11 - 12/11)
Total WIA - Adult
107
Federal
CFDA
Number
Pass-Through
Grantor Number
15.916
N/A
20.205
20.205
20.205
20.205
20.205
20.205
20.205
20.205
20.205
20.205
20.205
20.205
20.205
20.205
20.205
E080 (859)
E080 (298)
E080 (298)
FAN-E050493
E041 (150)
E041 (150)
FAN-EO41150
E80 (140)
E050(174)
E090(778)
E80 (724)
E036 (675)
E091 (079)
E091 (078)
E060(392)
E080(918)
Airport Improvement Program:
Airport - 2009 Rehabilitation Taxiway C
2010 FAA Rehabilitation Taxiway B,A6,U,W & Apron K
Total CFDA # 20.106
20.106
20.106
N/A
N/A
Interagency Hazardous Materials Public Sector Training and Planning Grants
Hazardous Materials Emergency Preparation Training
Total U.S. Department of Transportation
20.703
HMEOH8016060
94.009
N/A
84,520
84,520
12.XXX
NA
23,854
23,854
11.300
06-01-05392
89,929
89,929
98.001
PGA-P280515
(26,100)
(26,100)
U.S. DEPARTMENT OF INTERIOR
Passed Through the Ohio and Erie Canal Association:
Outdoor Recreation Acquistion, Development, and Planning:
Towpath Trail Survey - OECA
Total U.S. Department of Interior
U.S. DEPARTMENT OF TRANSPORTATION:
Passed Through the Ohio Department of Transportation:
Highway Planning and Construction:
ODOT — LPA/Bagley Road
ODOT — LPA/Bainbridge Right of Way
ARRA - ODOT — LPA/Bainbridge Road, Recovery Act Funded
ODOT — LPA/Eastland Rd and East Land Bridge No. 27
ODOT — LPA/Fitch Road Grade Separation
ODOT — LPA/Fitch Road Right of Way
ODOT — LPA/Cuyahoga Fitch Road
ODOT — LPA/Old Royalton Road Bridge 107
ODOT — LPA/ Rockside Road Bridge # 218
ODOT — LPA/ Rockside Road -Broadway to Aurora Rd.
ODOT — LPA/St. Clair Ave- East 72 st to East 140 st
ODOT — LPA/Stearns Road Project
ODOT — LPA/Sprague Road-York road to State road
ODOT — LPA/Tiedman Road-Brookpark to Memphis
ODOT — LPA/Towpath Trail Project
ODOT — LPA/West 3th Bridge
Total Highway Planning and Construction Cluster
CORPORATION FOR NATIONAL AND COMMUNITY SERVICE
Training and Technical Assistance
Total Corporation for National and Community Service
FEDERAL DEPARTMENT OF ARMY U.S. ARMY CORPS OF ENGINEERS
Direct Program:
Cuyahoga River Environment Restoration
Total Federal Department of Army U.S. Army Corps of Engineers
FEDERAL DEPARTMENT OF COMMERCE
Direct Program:
Investments for Public Works and Economic Development Facilities:
2009 Lakefront Connector Bridge
Total Federal Department of Commerce
FEDERAL DEPARTMENT OF INTERNATIONAL DEVELOPMENT
Direct Program:
USAID Foreign Assistance for Programs Overseas:
Development of DNA Database for Convicted Offenders in Pakistan
Total Federal Department of International Development
TOTAL EXPENDITURES OF FEDERAL AWARDS
Grant
Expenditures
4,674
4,674
1,563,085
7,117
6,586,020
2,368,541
2,786,302
423,927
(394,307)
770,352
158,221
1,926,239
668,466
79,508
3,160,926
1,186,381
37,211
232,116
21,560,105
571,575
326,104
897,679
38,789
22,496,573
$
108
402,412,192
NOTES TO THE FEDERAL AWARDS EXPENDITURES SCHEDULE
1. BASIS OF PRESENTATION
The accompanying Schedule of Expenditures of Federal Awards (the “Schedule”) reflects the
expenditures of the primary government of Cuyahoga County, Ohio, under programs financed by the U.S.
government for the year ended December 31, 2011. The Schedule has been prepared using the cash
basis of accounting. For purposes of the Schedule, federal awards include the following:


Direct federal awards
Pass-through funds received from nonfederal organizations made under federally sponsored
programs conducted by those organizations.
The information presented in the Schedule is presented in accordance with the requirements of OMB
Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Catalog of Federal
Domestic Assistance (CFDA) Numbers or Primary Grant Numbers are presented for those programs for
which such numbers are available.
The County’s basic financial statements include the operations of MetroHealth System, a discretely
presented component unit, which expended $7,949,442 in federal awards during the year ended
December 31, 2011. These expenditures are not included in the accompanying Schedule for the year
ended December 31, 2011, because MetroHealth System had a separate audit performed by other
auditors in accordance with OMB Circular A-133.
2. LOANS RECEIVABLE
As shown in the table below, the County had loans receivable outstanding at December 31, 2011, under
the Community Development Block Grant (CDBG) Entitlement and Home Investment Partnership
programs. All of the loans outstanding at December 31, 2011, pertained to federal awards received by
the County, or program income associated with these awards, and provided as loans to eligible recipients
in prior years. The loan balances detailed below were included in federal expenditures presented in the
accompanying Schedule. The loans outstanding at December 31, 2011, under federal grant programs
were as follows:
Program Title
CDBG — Entitlement and (HUDAdministered) Small Cities Cluster
CDBG Home Investment Partnership Program
Total
Federal
CFDA
No.
Loan Amounts
Outstanding at
December 31,
2011
14.218
$ 15,076,778
14.239
11,985,845
$ 27,062,623
3. SUBRECIPIENTS
Certain funds are passed through to subgrantee organizations by the County. Expenditures incurred by
the subgrantees and reimbursed by the County are included in the accompanying Schedule. The County
records expenditures of Federal awards to subrecipients when paid in cash on the Schedule.
The subrecipient agencies have certain compliance responsibilities related to administering these Federal
programs. Under OMB Circular A-133, the County is responsible for monitoring subrecipients to help
assure that Federal awards are used for authorized purposes in compliance with laws, regulations and
the provisions of contracts or grant agreements, and that performance goals are achieved.
109
NOTES TO THE FEDERAL AWARDS EXPENDITURES SCHEDULE
(CONTINUED)
4. MATCHING REQUIREMENTS
Certain Federal programs require that the County contribute non-Federal funds (matching funds) to
support the federally funded programs. The expenditures of non-Federal matching funds are not included
on the Schedule.
5. DISCRETELY PRESENTED COMPONENT UNITS
The accompanying Schedule does not include Federal assistance, if any, provided to the County’s
discretely presented component units
6. NEGATIVE AMOUNTS
Negative amounts represent adjustments or credits made to amounts reported as expenditures in the
current fiscal year or to amounts reported as expenditures in prior years.
.
110
INDEPENDENT ACCOUNTANTS’ REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
REQUIRED BY GOVERNMENT AUDITING STANDARDS
Cuyahoga County
1219 Ontario Street
We have audited the financial statements of the governmental activities, business type activities, each
major fund, and the aggregate remaining fund information of Cuyahoga County, Ohio (the County) as of
and for the year ended December 31, 2011 which collectively comprise the County’s basic financial
statements and have issued our report thereon dated July 12, 2013, wherein we noted the County
implemented Governmental Accounting Standards Board Statement No. 54, “Fund Balance Reporting
and Governmental Fund Type Definitions”. Our report refers to other auditors. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in the Comptroller General of the United States’ Government
Auditing Standards. Other auditors audited the financial statements of the discretely presented
component unit, The MetroHealth System, as described in our report on the County’s financial
statements. This report does not include the results of the other auditors’ testing of internal controls over
financial reporting or compliance and other matters that those auditors separately reported.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the County’s internal control over financial reporting
as a basis for designing our audit procedures for the purpose of expressing our opinions on the financial
statements, but not for the purpose of opining on the effectiveness of the County’s internal control over
financial reporting. Accordingly, we have not opined on the effectiveness of the County’s internal control
over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, when performing their assigned functions, to prevent, or detect and timely
correct misstatements. A material weakness is a deficiency, or combination of internal control deficiencies
resulting in more than a reasonable possibility that a material misstatement of the County’s financial
statements will not be prevented, or detected and timely corrected.
Our consideration of internal control over financial reporting was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over
financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not
identify any deficiencies in internal control over financial reporting that we consider material weaknesses,
as defined above.
Cuyahoga County
Independent Accountants’ Report on Internal Control over
Financial Reporting and on Compliance and Other Matters
Required by Government Auditing Standards
Page 2
Compliance and Other Matters
As part of reasonably assuring whether the County’s financial statements are free of material
misstatement, we tested its compliance with certain provisions of laws, regulations, contracts, and grant
agreements, noncompliance with which could directly and materially affect the determination of financial
statement amounts. However, providing an opinion on compliance with those provisions was not an
objective of our audit and accordingly, we do not express an opinion. The results of our tests disclosed
instances of noncompliance or other matters we must report under Government Auditing Standards which
are described in the accompanying schedule of findings and questioned costs as items 2011-01 to 201104.
We also noted certain matters not requiring inclusion in this report that we reported to the County’s
management in a separate letter dated July 12, 2013.
The County’s responses to the findings identified in our audit are described in the accompanying
schedule of findings and questioned costs. We did not audit the County’s responses and, accordingly, we
express no opinion on them.
We intend this report solely for the information and use of management, the audit committee, Council,
and federal awarding agencies and pass-through entities and others within the County. We intend it for
no one other than these specified parties.
Dave Yost
Auditor of State
Columbus, Ohio
July 12, 2013
112
INDEPENDENT ACCOUNTANTS’ REPORT ON COMPLIANCE WITH REQUIREMENTS
APPLICABLE TO EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Cuyahoga County
1219 Ontario Street
Compliance
We have audited the compliance of Cuyahoga County, Ohio, (the County) with the types of compliance
requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133, Compliance
Supplement that directly and materially affect each of its major federal programs for the year ended
December 31, 2011. The summary of auditor’s results section of the accompanying schedule of findings
and questioned costs identifies the County’s major federal programs. The County’s management is
responsible for complying with the requirements of laws, regulations, contracts, and grants applicable to
each major federal program. Our responsibility is to express an opinion on the County’s compliance based
on our audit.
The County’s basic financial statements include the operations of the MetroHealth System, which
expended $7,949,442 in federal awards which is not included in the County’s Federal Awards Expenditure
Schedule for the year ended December 31, 2011. Our audit of Federal awards, described below, did not
include the operations of the MetroHealth System because the component unit engaged another auditor to
audit its Federal award programs in accordance with OMB Circular A-133.
Our compliance audit followed auditing standards generally accepted in the United States of America; the
standards applicable to financial audits included in the Comptroller General of the United States’
Government Auditing Standards; and OMB Circular A-133, Audits of States, Local Governments, and NonProfit Organizations. These standards and OMB Circular A-133 require that we plan and perform the audit
to reasonably assure whether noncompliance occurred with the compliance requirements referred to above
that could directly and materially affect a major federal program. An audit includes examining, on a test
basis, evidence about the County’s compliance with these requirements and performing other procedures
we considered necessary in the circumstances. We believe our audit provides a reasonable basis for our
opinion. Our audit does not provide a legal determination on the County’s compliance with these
requirements
As described in findings 2011-05 through 2011-07 in the accompanying schedule of findings and
questioned costs, the County did not comply with requirements regarding procurement and suspension and
debarment applicable to its Adoption Assistance Grant (Title IV-E) and eligibility applicable to its Temporary
Assistance for Needy Families (TANF) major federal programs. Compliance with these requirements is
necessary, in our opinion, for the County to comply with requirements applicable to these programs.
The results of our auditing procedures also disclosed another instance of noncompliance with these
requirements that, while not affecting our opinion on compliance, OMB Circular A-133 requires us to report.
The accompanying schedule of findings and questioned costs lists this instance as finding 2011-08.
Cuyahoga County
Independent Accountants’ Report on Compliance With Requirements Applicable
to Each Major Federal Program and on Internal Control Over Compliance
In Accordance with OMB Circular A-133
Page 2
In our opinion, except for the noncompliance described in the preceding paragraph, Cuyahoga County
complied, in all material respects, with the requirements referred to above that could directly and
materially affect each of its major federal programs for the year ended December 31, 2011.
Internal Control Over Compliance
The County’s management is responsible for establishing and maintaining effective internal control over
compliance with the requirements of laws, regulations, contracts, and grants applicable to federal
programs. In planning and performing our audit, we considered the County’s internal control over
compliance with the requirements that could directly and materially affect a major federal program in order
to determine our auditing procedures for the purpose of expressing our opinion on compliance, and to test
and report on internal control over compliance in accordance with OMB Circular A-133, but not for the
purpose of opining on the effectiveness of internal control over compliance. Accordingly, we have not
opined on the effectiveness of the County’s internal control over compliance.
Our consideration of internal control over compliance was for the limited purpose described in the
preceding paragraph and was not designed to identify all deficiencies in internal control over compliance
that might be significant deficiencies or material weaknesses and therefore, we cannot assure we have
identified all deficiencies, significant deficiencies, or material weaknesses. However, as discussed below,
we identified certain deficiencies in internal control over compliance that we consider to be material
weaknesses.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, when performing their assigned functions, to
prevent, or to timely detect and correct, noncompliance with a federal program compliance requirement. A
material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in
internal control over compliance, such that there is a reasonable possibility that material noncompliance
with a federal program compliance requirement will not be prevented, or timely detected and corrected.
We consider the deficiencies in internal control over compliance described in the accompanying schedule
of findings and questioned costs as items 2011-05 through 2011-08 to be material weaknesses.
The County’s responses to the findings we identified are described in the accompanying schedule of
findings and questioned costs. We did not audit the County’s responses and, accordingly, we express no
opinion on them.
We intend this report solely for the information and use of management, the audit committee, Council,
federal awarding agencies and pass-through entities. It is not intended for anyone other than these
specified parties.
Dave Yost
Auditor of State
Columbus, Ohio
July 12, 2013
114
CUYAHOGA COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
OMB CIRCULAR A - §133 - §505
1. SUMMARY OF AUDITOR’S RESULTS
(d)(1)(i)
Type of Financial Statement Opinion
Unqualified
(d)(1)(ii)
Were there any material control
weaknesses reported at the financial
statement level (GAGAS)?
Were there any other significant
deficiencies in internal control
reported at the financial statement
level (GAGAS)?
Was there any reported material
noncompliance at the financial
statement level (GAGAS)?
Were there any material internal
control weaknesses reported for
major federal programs?
Were there any other significant
deficiencies in internal control
reported for major federal programs?
Type of Major Programs’ Compliance
Opinion
No
(d)(1)(ii)
(d)(1)(iii)
(d)(1)(iv)
(d)(1)(iv)
(d)(1)(v)
(d)(1)(vi)
(d)(1)(vii)
Are there any reportable findings
under § .510?
Major Program(list):
No
Yes
Yes
No
Unqualified for all major programs except for the
Temporary Assistance for Needy Families (TANF)
and the Adoption Assistance (Title IV-E) federal
programs which were qualified
Yes
Child Nutrition Cluster:
School Breakfast Program (SBP), CFDA#
10.553, National School Lunch Program (NSLP),
CFDA# 10.555
CDBG- Entitlement Grants Cluster:
Community Development Block
Grants/Entitlement Grants, CFDA# 14.218
Community Development Block Grant ARRA
Entitlement Grants (CDBG-R), CFDA# 14.253
Neighborhood Stabilization Program (NSP2),
CFDA# 14.256
ARRA- Homelessness Prevention and Rapid ReHousing Program (HPRP), CFDA# 14.257
Congressionally Recommended AwardsFatherhood Initiative Program/Prisoner Reentry
Program, CFDA# 16.753
Airport Improvement Program, CFDA# 20.106
Highway Planning and Construction (Federal-Aid
Highway Program), CFDA# 20.205 and ARRARecovery Act
115
CUYAHOGA COUNTY
(CONTINUED)
Brownfields Assessment and Cleanup
Cooperative Agreements, CFDA# 66.818 and
ARRA-Recovery Act
Weatherization Assistance for Low-Income
Persons, CFDA# 81.042 and ARRA-Recovery
Act
Energy Efficiency and Conservation Block Grant
Program, CFDA# 81.128 and ARRA-Recovery
Act
Special Education Cluster (IDEA):
Special Education- Grants to States (IDEA, Part
B), CFDA# 84.027, Special Education- Preschool
Grants (IDEA Preschool), CFDA# 84.173,
ARRA-Special Education-Grants to States
(IDEA, Part B, CFDA#84.391, ARRA-Special
Education- Preschool Grants (IDEA Preschool),
CFDA# 84.392
Rehabilitation Services- Vocational Rehabilitation
Grants to States, CFDA# 84.126
Early Intervention Services (IDEA) Cluster:
Special Education- Grants for Infants and
Families, CFDA# 84.181, ARRA-Special
Education- Grants for Infants and Families,
CFDA# 84.393
Temporary Assistance For Needy Families
(TANF) (Title IV-A), CFDA# 93.558
CCDF Cluster:
Child Care and Development Block Grant (Title
IV-A), CFDA# 93.575, Child Care and Mandatory
and Matching Funds of the Child Care and
Development Fund, CFDA# 93.596
Adoption Assistance (Title IV-E), CFDA# 93.659
Medical Assistance Program (Medicaid; Title
XIX), CFDA# 93.778 and ARRA-Recovery Act
(d)(1)(viii)
Dollar Threshold: Type A\B Programs
(d)(1)(ix)
Low Risk Auditee?
116
Homeland Security Grant Program, CFDA#
97.067
Type A: > $ 3,000,000
Type B: all others
No
CUYAHOGA COUNTY
(CONTINUED)
2. FINDINGS RELATED TO THE FINANCIAL STATEMENTS
REQUIRED TO BE REPORTED IN ACCORDANCE WITH GAGAS
Finding Number
2011-01
Material Noncompliance Finding – County Financial Reports
Ohio Rev. Code §117.38 provides that GAAP basis entities must file an annual financial report with the Auditor
of State within 150 days of their fiscal year-end.
Ohio Rev. Code §319.11 states in part that the county auditor upon completing the annual financial report shall
publish notice that the report has been completed and is available for public inspection at the office of the
county auditor. The notice shall be published once in a newspaper of general circulation in the county. If there
is no newspaper of general circulation in the county, then publication is required in the newspaper of general
circulation in an adjoining county that has the largest circulation in that adjoining county. The report shall
contain at least the information required by section 117.38 of the Revised Code, and a copy shall be filed with
the auditor of state.
The County filed the 2011 annual financial report with the Auditor of State on June 2, 2013 and it did not
publish the required notice. This weakness results in delays in the audit process and hinders the County’s
ability to analyze financial information and make sound financial decisions.
We recommend the County file the annual report timely and publish the required notice.
County’s Response
We agree with the auditors’ comments. The County anticipates that we will be up to date on financial
statement submissions for 2012. Therefore the comparative analysis and all other information will be relevant.
Finding Number
2011-02
Material Noncompliance Finding – Negative Cash Fund Balances
Ohio Rev. Code § 5705.10(H) provides that money paid into a fund must be used only for the purposes for
which such fund has been established. A fund with a negative fund balance signifies that monies from other
funds were used to meet their obligations.
As of December 31, 2011, the following funds had negative cash fund balances:
Fund
Governmental Funds:
Workforce Investment Act
Capital Projects
Enterprise Funds:
Central Custodial Services
Amount
($1,753,038)
(603,863)
(70,693,739)
(312,372)
(1,469,745)
A fund with a negative cash fund balance indicates that money from another fund was used to pay the
expenditures of that fund.
We recommend the County consider advancing monies from the General Fund in order to ensure negative
cash fund balances are eliminated.
117
CUYAHOGA COUNTY
(CONTINUED)
Finding Number
2011-02
(Continued)
County’s Response
We agree with the auditors’ comments. However, while the funds appear to have negative cash balances the
County maintains sufficient cash balances in the General fund to pay for any and all expenditures at the time
the expenditure was made. The Capital Projects fund will be replenished when debt is issued for the various
capital projects. The remaining funds will be replenished when funds are received from granting agencies or
other county agencies.
Finding Number
2011-03
Material Noncompliance Finding – Appropriations Exceeded Total Estimated Resources
Ohio Rev. Code § 5705.39 states that the total appropriations from each fund shall not exceed the total of the
estimated revenue available for expenditure therefrom, as certified by the budget commission, or in case of
appeal, by the board of tax appeals. No appropriation measure shall become effective until the county auditor
files with the appropriating authority a certificate that the total appropriations from each fund, taken together
with all other outstanding appropriations, do not exceed such official estimate or amended official estimate.
When the appropriation does not exceed such official estimate, the county auditor shall give such certificate
forthwith upon receiving from the appropriating authority a certified copy of the appropriation measure.
Appropriations shall be made from each fund only for the purposes for which such fund is established.
The County filed their original permanent appropriations on January 15, 2011. However, the County Auditor
did not issue a “do not exceed” certificate due to the following funds having appropriations in excess of total
estimated resources:
Original Estimated
Revenues Plus
Fund Name
Carryover Balances
Appropriations
Variance
Human Services
Workforce Investment Act Operating
Capital Projects Fund
Data Processing
Printing and Reproduction
$225,888,617
(8,432,187)
14,477,325
(62,236,030)
3,114,222
17,475,386
3,672,339
$240,917,048
3,034,357
23,518,112
4,295,305
19,029,898
4,957,040
($15,028,431)
(11,466,544)
(9,040,787)
(62,236,030)
(1,181,083)
(1,554,512)
(1,284,701)
These weaknesses may result in the County spending more than their available resources.
We recommend the County establish procedures to ensure total appropriations do not exceed total estimated
resources.
County’s Response
We agree with the auditors’ comments. The Financial Reporting department will be coordinating with the Office
of Budget and Management and the Budget Commission on a periodic basis throughout the year to review the
status of the Certificate and will amend the Certificate when needed to alleviate this problem in the future.
118
CUYAHOGA COUNTY
(CONTINUED)
Finding Number
2011-04
Material Noncompliance Finding – Proper Certification of Funds
Ohio Revised Code § 5705.41(D)(1) prohibits a subdivision or taxing entity from making any contract or
ordering any expenditure of money unless a certificate signed by the fiscal officer is attached thereto. The
fiscal officer must certify the amount required to meet any such contract or expenditure has been lawfully
appropriated and is in the treasury, or is in the process of collection to the credit of an appropriate fund free
from any previous encumbrance. Further, contracts and orders for expenditures lacking prior certification shall
be null and void.
There are several exceptions to the standard requirement stated above that a fiscal officer’s certificate must be
obtained prior to a subdivision or taxing authority entering into a contract or order involving the expenditure of
money. The main exceptions are: “then and now” certificates, blanket certificates, and super blanket
certificates, which are provided for in sections 5705.41(D)(1) and 5705.41(D)(3), respectively, of the Ohio
Revised Code.
The fiscal officer did not certify there were sufficient funds to meet any obligation during 2011. This weakness
may result in obligations being entered into and sufficient funds not being available to pay for it.
We recommend the fiscal officer certify the availability of funds for all transactions prior to entering into the
obligation.
County’s Response
We agree with the auditors’ comments. Contracts and purchases were certified during the year; however, they
were not certified by the Fiscal officer. Policies and procedures will be modified to ensure the Fiscal Officer
certifies the availability of funds prior to entering into the obligation.
3. FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS
Finding Number
2011-05
CFDA Title and Number
Federal Award Number / Year
2011
Federal Agency
U.S. Department of Health and Human Services
Pass-Through Agency
Ohio Department of Job and Family Services
Material Weakness, Material Noncompliance, Procurement and Suspension and Debarment Finding
2 CFR 180.305 states that Non-Federal entities are generally prohibited from contracting with or making
subawards under covered transactions to parties that are suspended or debarred or whose principals are
suspended or debarred. “Covered transactions” include those procurement contracts for goods and services
awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) that are expected to
equal or exceed $25,000 or meet certain other specified criteria. 2 CFR section 180.220 of the governmentwide nonprocurement debarment and suspension guidance contains those additional limited circumstances.
All nonprocurement transactions (i.e., subawards to subrecipients), irrespective of award amount, are
considered covered transactions.
119
CUYAHOGA COUNTY
(CONTINUED)
Finding Number
2011-05
(Continued)
When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal
entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be
accomplished by checking the Excluded Parties List System (EPLS) maintained by the General Services
Administration (GSA), collecting a certification from the entity, or adding a clause or condition to the covered
transactions with that entity.
We noted fourteen contractors were paid in excess of $25,000 in Adoption Assistance federal program monies
and they did not verify they were not suspended or debarred. As a result, controls were not in place to ensure
that contractors suspended or debarred did not receive federal program monies.
We recommend that procedures be developed for the Adoption Assistance federal program to ensure that
prior to contracting with vendors that will be paid with federal funds they verify the vendor is not suspended or
debarred by checking the Excluded Parties List System (EPLS) maintained by the General Services
Administration (GSA), collecting a certification from the vendor, or adding a clause or condition to the covered
transaction with the vendor.
County’s Response
We agree with the auditors’ comments. Policies and procedures have been put in place through the Inspector
General’s Office to ensure contractors are not suspended or debarred. Agencies will also be made aware of
procedures to follow for non-contracting vendors that are paid with federal funds to ensure they are not
suspended or debarred.
Finding Number
2011-06
Temporary Assistance for Needy Families (TANF) (Title IV-A),
CFDA# 93.558
2011
Federal Agency
Pass-Through Agency
Material Weakness, Material Noncompliance, Eligibility - Maintenance of Records Finding
Maintenance of Eligibility Records – TANF Prevention, Retention, and Contingency (PRC) Program:
45 CFR 206.10, Application, determination of eligibility and furnishing of assistance, (a) State plan
requirements. A State plan under title I, IV-A, X, XIV, or XVI (AABD), of that Social Security Act shall provide,
in part, (8) each decision regarding eligibility or ineligibility will be supported by facts in the applicant’s or
recipient’s case record. The Ohio Department of Job and Family Services passes through TANF (IV-A)
assistance to the Cuyahoga County Department of Job and Family Services (CCDJFS) to provide TANF
Prevention, Retention, and Contingency (PRC) program benefits.
The CCDJFS is responsible for maintaining case files and all pertinent support documentation to provide
evidence that control procedures have been performed by the County over the TANF PRC Program, to
provide back-up documentation regarding eligibility and other case activity, and to substantiate the CCDJFS is
complying with federal rules and regulations.
120
CUYAHOGA COUNTY
(CONTINUED)
Finding Number
2011-06
(Continued)
During a test of 40 case files, we noted the following:


Three instances (7.5%) in which the PRC applications were not maintained in the electronic case
files.
Four instances (10%) in which the “Notice of Decision of Your Application For PRC Benefits” were not
maintained in the electronic case files.
These weaknesses may result in applicants receiving federal monies when they are not eligible.
We recommend that all required forms be maintained in the electronic file.
County’s Response
We agree with the auditors’ comments. We will work with the Department of Job and Family Services to
ensure that all required forms will be maintained in electronic format. Appropriate training and monitoring
procedures will be implemented to correct the documentation issues identified.
Finding Number
2011-07
Temporary Assistance for Needy Families (TANF) (Title IV-A),
CFDA# 93.558
2011
Federal Agency
Pass-Through Agency
Material Weakness, Material Noncompliance, Questioned Costs, Eligibility - Maintenance of Records
Finding
45 CFR § 260.31(a) states, in pertinent part:
(1) The term ‘‘assistance’’ includes cash, payments, vouchers, and other forms of benefits designed to
meet a family’s ongoing basic needs (i.e., for food, clothing, shelter, utilities, household goods,
personal care items, and general incidental expenses).
(2) It includes such benefits even when they are:
(i) Provided in the form of payments by a TANF agency, or other agency on its behalf, to individual
recipients; and
(ii) Conditioned on participation in work experience or community service (or any other work activity
under § 261.30).
121
CUYAHOGA COUNTY
(CONTINUED)
Finding Number
2011-07
(Continued)
As noted in the TANF State Plan effective June 1, 2010 (pages 12-13), the PRC program provides benefits
and services to TANF-eligible families who are in need of help with essential support to move out of poverty
and achieve self-sufficiency. The program is designed to provide benefits and services that are not considered
assistance under 45 CFR § 260.31. The PRC program offers a broad variety of services and short-term
benefits for TANF-eligible families that are designed to accomplish one of the four purposes of TANF. Each
County Department of Job and Family Services (CDJFS) is required to have a written statement of its PRC
program and policy (PRC plan) which among other program requirements should include eligibility
requirements for the benefits and services.
Cuyahoga County’s Prevention Retention Contingency Program Manual, dated November 1, 2011, includes
eligibility requirements. In addition, page 6 of the Manual states that “all countable income which is received
or expected to be received during the 30 day budget period is considered when determining financial need.”
The 30-day budget period begins 30 days prior to the date of the PRC application.
A test of 40 cases disclosed an instance (2.5%) in which the Income Eligibility Support was not maintained and
scanned into the electronic database. We reviewed the Cash Issuance History Screen (IQCH Report) and
noted $443 in grant funds were used in this instance during 2011. This projects to a questioned cost in excess
of $10,000. Missing case file documentation increases the risk that program funds were used to serve
ineligible applicants. Without consistently obtaining, maintaining or reviewing the required documentation on
file, the CCDJFS may not be able to fully support or ensure payments were made only to or on behalf of
eligible recipients which could and did result in questionable benefit.
We recommend that all documentation supporting eligibility be retained and scanned into the system. A
checklist should also be used to ensure the required information is properly maintained.
County’s Response
We agree with the auditors’ comments. We will work with the Department of Job and Family Services to
ensure that all required forms will be maintained in electronic format and a checklist will be developed/used to
ensure that required information is properly maintained so eligibility can be verified.
Finding Number
2011-08
2011
Federal Agency
Pass-Through Agency
Material Weakness and Material Noncompliance Finding – Adjustments to the Federal Schedule
A-133.300 includes the following auditee responsibilities.
(a) Identify, in its accounts, all Federal awards received and expended and the Federal programs under
which they were received. Federal program and award identification shall include, as applicable, the
CFDA title and number, award number and year, name of the Federal agency, and name of the passthrough entity.
122
CUYAHOGA COUNTY
(CONTINUED)
Finding Number
2011-08
(Continued)
(d) Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in
accordance with §___.310.
Management is responsible for developing internal control procedures which provide reasonable assurance
the County's Schedule of Expenditures of Federal Awards (the Schedule) is complete and accurate. Sound
internal controls require a review of the Schedule be performed and documented to verify the information
reported is complete and accurate before finalizing the Schedule.
We noted the County does not have any written policies and procedures to ensure the completeness and
accuracy of the amounts reported on the Schedule. We also noted the County did not follow the required
guidance maintained in the Auditor of State’s website pertaining to reporting Job and Family Services (JFS)
program expenditures on the Schedule.
We noted the expenditure amount reported for Adoption Assistance (Title IV-E) was $910,980 while the
correct amount was $18,999,744, a difference of $18,088,764. Management made the necessary adjustment
to the Schedule.
We also noted similar errors in the following non‐major programs and Management made the necessary
adjustment to the Schedule:
Federal Program
CFDA #
Amount
Reported
Corrected
Amount
Difference
Child Support Enforcement (Title IV-D)
Foster Care (Title IV-E)
93.563
93.658
$18,008,954
1,294,152
$21,233,659
23,474,227
$3,224,705
22,180,075
We recommend that written policies and procedures be developed detailing the process to be followed when
preparing the Schedule. The procedures should document the names of the employees responsible for
calculating and verifying the amounts to be reported on the Schedule by CFDA number. The procedures
should also require following the guidance maintained in the Auditor of State website when reporting JFS
expenditures and other federal resources.
County’s Response:
We agree with the auditors’ comments. Procedures will be put in place to ensure staff is trained on the proper
methods to compile the Schedule of Expenditures of Federal Awards.
123
This Page Intentionally Left Blank.
124
CUYAHOGA COUNTY
SCHEDULE OF PRIOR AUDIT FINDINGS AND QUESTIONED COSTS
OMB CIRCULAR A -133 § .315 (b)
Fully
Corrected?
Not Corrected, Partially
Corrected; Significantly
Different Corrective Action
Taken; or Finding No Longer
Valid; Explain
Finding
Number
Finding
Summary
2010-01
Numerous audit adjustments were made to the
financial statements.
Yes
2010-02
The County filed the 2010 annual financial report
on May 27, 2011. However, the report headings,
data and information were actually 2009
information. Comparative information provided
was a comparison of 2009 to 2008 rather than
2010 compared to 2009. The County also failed to
publish the required notice.
No
Partially Corrected, see finding
2011-01
2010-03
Nine funds had negative cash fund balances at
year end, contrary to ORC § 5705.10(H),
No
Not Corrected, see finding
2011-02
2010-04
Seven funds had appropriations in excess of total
estimated resources, contrary to ORC § 5705.39,
No
2011-03
2010-05
A review of all eight Temporary Assistance for
Needy Families Summer Youth Subrecipient
contracts disclosed the Department of Workforce
Development did not disclose the ARRA monies
and CFDA# to its subrecipients, contrary to 2 CFR
Section 176.210. Furthermore, the Department did
not require its subrecipients report ARRA
expenditures on their Schedule of Expenditures of
Federal Awards.
Yes
2010-06
A review of the Child Care Cluster and the
Adoption Assistance federal programs disclosed
the County’s administrators of these programs
were not aware of the suspension and debarment
requirements of 2 CFR 180.300.
No
2010-07
A test of 25 employees from the Board of
Development Disabilities charging the Special
Education Cluster federal grant disclosed none of
them completed a semi-annual certification that the
employee worked solely on this federal program
during 2010, as required by 2 CFR Part 225,
Appendix B, paragraphs 8.h 3 and 4. As a result,
the total amount tested was $31,341 and was
considered a questioned cost.
Yes
125
2011-05
CUYAHOGA COUNTY
SCHEDULE OF PRIOR AUDIT FINDINGS AND QUESTIONED COSTS
OMB CIRCULAR A -133 § .315 (b)
(CONTINUED)
Fully
Corrected?
Not Corrected, Partially
Corrected; Significantly Different
Corrective Action Taken; or
Finding No Longer Valid;
Explain
Finding
Number
Finding
Summary
2010-08
A test of 40 case files, disclosed four instances
(10%) in which the PRC applications were not
maintained in the electronic case files and ten
instances (25%) in which the “Notice of Decision
of Your Application For PRC Benefits” were not
maintained in the electronic case files. We also
noted six instances (19%) of 31 case files tested
in which the PRC Applications containing the
supervisory
approvals/sign-offs
were
not
maintained in the electronic case files, as
required by 45 CFR 206.10, Application,
determination of eligibility and furnishing of
assistance, (a) State plan requirements.
No
Not Corrected, see finding 201106
2010-09
A test of 39 case files disclosed eligibility
documentation was not maintained in four
instances (10%), as required by 45 CFR §
260.31(a), The errors totaled $2,163 and were a
questioned cost projected to be in excess of
$10,000.
No
Not Corrected, see finding 201107
2010-10
45 CFR 206.10(a)(8) states that each decision
regarding eligibility or ineligibility will be
supported by facts in the applicant’s or
recipient’s case record. A test of 60 case files
disclosed several instances in which proper
support documentation for eligibility was not
maintained. The errors totaled $2,473 and were
a questioned cost projected to be in excess of
$10,000.
Yes
126
CUYAHOGA COUNTY FINANCIAL CONDITION
CUYAHOGA COUNTY
CLERK’S CERTIFICATION
This is a true and correct copy of the report which is required to be filed in the Office of the
Auditor of State pursuant to Section 117.26, Revised Code, and which is filed in Columbus, Ohio.
CLERK OF THE BUREAU
CERTIFIED
AUGUST 6, 2013
88 East Broad Street, Fourth Floor, Columbus, Ohio 43215-3506
Phone: 614-466-4514 or 800-282-0370
Fax: 614-466-4490
www.ohioauditor.gov

CUYAHOGA COUNTY SINGLE AUDIT FOR THE YEAR ENDED DECEMBER 31, 2011

Transcription

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